Mayflower Capital






Risk Management

      Risk management and insurance is part of financial planning. People need to protect themselves from the risk of liability, risk of medical bills, risk of needing Long Term Care, risk of  incurring a long term disability, risk of loss of the life of the family's breadwinner, risk to their home. The advantage of doing integrated financial planning is that if a client is fully insured then when a risk results in actual losses then insurance hopefully will cover most of the cost. This may prevent the client from needing to do a sudden, unplanned taxable sale of investments to pay for the tragedy. If the sudden, unplanned sale occurred when someone was in a high tax bracket then that would cause even more costs because of capital gains taxes, which shows why risk management and insurance are very important.

     Clients should not assume that examining their insurance needs by a financial planner will result in a recommendation to cut back on insurance; rather the opposite may happen. Clients may have heard decades ago that it is cheaper to cancel a Whole Life policy and get Term Life and invest the difference, however, now the financial planning industry has realized in many cases that Whole Life policies may have many benefits. The benefit for a client to get fee-only financial planning is that it will alert the client to hidden dangers of not having adequate coverage and client is not subject to sales pressure, instead the client will get objective advice.

    Some aspects of risk management may be to simply avoid certain risks if no reasonably priced insurance is available. Other aspects of risk management may include consulting with an attorney about using Trusts, Corporations, or LLC's, etc.

Mayflower Capital