Life Insurance as an Asset Class
We do not view life insurance simply as a financial product nor to be used simply to provide a benefit upon the demise of the insured life or lives. Rather, we understand life insurance as a unique asset class. With today’s companies and our predecessor companies, we are in our seventh decade of working with this unique financial instrument. Attributes availed only in this instrument and no others allow our planning to deliver living benefits of asset protection for vast amounts of assets, to build rivers of positive tax-free cash flow during our clients’ lifetimes while continuously providing the core benefit of significant tax-free income upon the demise of the insured. Though rarely understood by other financial advisories, these elements and these characteristics are nonetheless undeniable. For more than 60 years, Gottlieb has been at the fore of creative uses of life insurance for its clients – whether wealthy families, publicly traded companies, closely held companies or large associations of employees.
The national reputation of Gottlieb and its principals is indisputable. Building on deep technical expertise of senior members of Gottlieb, ground-breaking programs to deliver benefits, protect wealth and expand assets that commenced in the 1960s continue to this day. Validated from large corporate plans as well as family planning structures still delivering results to clients while continuously administered by Gottlieb from inception through today, our vigil for clients is supported by this consistency. We made long-term promises; delivering on such promises has become our legacy. Patents issued and pending further confirm Gottlieb’s ongoing and expanding leadership at the apex of creativity and technical excellence.
Resting on our laurels is not acceptable in our culture. Learning from mistakes – ours and others – and building solutions to continually improve on whatever we have implemented, learned and all of what we continue to manage and provide advice for clients and their advisors is a part of our everyday environment.
Regardless of how we may arrange the use of life insurance in a strategy or program, we continuously undertake diligence and consideration of carriers and products alike, having a long history of reinventing products to achieve specific objectives. It is not simply to review multiple financial projections from an array of insurance carriers. Our diligence extends and reaches to studying financials of carriers, reviewing historical treatment of policyholders, current and planned servicing systems and cultures and critically assessing management orientation and focus. Our intensity with every carrier we consider and place on our platform is unwavering. Once on our platform, they are expected to do no worse than maintain all of the attributes that caused us to bring the carrier to our clients. Should they falter financially, fail to deliver on promises or reduce levels of service, our carriers understand and accept that we will do whatever is required to replace, surrender and/or exchange our clients’ policies to ensure that clients’ assets are not at risk – whether or not such a transition is in the best interest of Gottlieb financially. Our clients are our most important asset.
Drawing upon decades of experience and results at a very high level, we have converted certain discrete strategies into repeatable programs that apply to a broad class of clients. These programs are tuned for each particular client but have characteristics that reach constituencies with similar objectives and needs. Gottlieb companies are founded or acquired in many cases to support a certain strategy or plan that Gottlieb has affirmed meets our quality review and has application to a broad group of clients and prospects within our scope.
Founded in 1997, Management Solutions has become the sole distributor of our most active life insurance-based strategy, our Tandem Financial Strategy℠. All of our Tandem plans are designed, developed, underwritten and administered through Management Solutions. Each Tandem plan has a routinized process by which we undertake each phase of our work. This routinized approach to all activities has continued to be an underpinning of the work of Gottlieb companies.
Tandem Financial Strategy℠ (TFS)
The Tandem Financial Strategy℠ is a proprietary, patent-pending financial structure enabling ESOPs and other employer organizations to develop a non-correlated asset to diversify wealth accumulation.
TFS uses time-tested financial principles to generate above-market returns with a low risk-adjusted beta of risk. Tandem Plans are engineered to deliver income streams that support obligations such as ESOP Repurchase Obligations, Seller Notes and executive recruiting and retention programs – liabilities and assets that today are funded by ESOPs on a pay-as-you-go basis.
Our work begins with an engagement by clients to listen to client concerns, study existing benefits and unfunded liabilities, assist our clients in articulating their objectives and – once this work is completed – to go to work to engineer a Tandem Plan to address and resolve specific client concerns. Tandem Plans use financial instruments – life insurance and debt – that are generally associated with costs and liabilities. As with much of our work that is counterintuitive to conventional wisdom, we juxtapose these instruments in a manner that, after a nominal period of cost, develops extraordinary assets and cash inflow opportunities that tend to match perfectly for our ESOP and other clients who hold a view of investment returns that are years and decades in duration, not weeks and months. We design client programs and undertake financial and insurance underwriting in a manner aligned with each client’s stated guidelines, goals and limitations. Tandem Plans allow our clients to develop a financial program that is built to last and respond positively in a host of financial environments.
The arrangement’s long-term financial success is predicated on a conservatively assumed general continuation of the past 100+ years of financial/investment history. We believe that long-term investments and equity market upswings (credited to the plan’s asset values) will be greater than short-term (often LIBOR-based) expense of interest rates, when measured over extended durations (15+ years). This financial interplay serves as the cornerstone of the TFS concept: earning a positive interest rate spread.
While historical results measured over long durations validate that this position is historically accurate, historical results are no guarantee of future performance. However, decades-long retrospective analysis suggests a high probability such results will be achieved in the future. The Tandem Financial Strategy℠ not only provides an income stream, but corporate clients have found this asset accumulation structure beneficial in assisting employers by providing and funding key person benefit programs. This strategy provides an excellent tool to help companies retain their most valuable asset: their key employees. By utilizing the Tandem Financial Strategy℠, companies can provide significant income streams as incentives to attract and retain those key employees who continue to perform at high levels.
Ultra-high net worth families and large employers have recognized that utilizing our levered arbitrage structure and attendant management system (MAID Financial Technology℠), employers and their executives are able to not only address internal benefit and liability human resource issues, but they can also expand their significant contributions of foundational giving into extraordinary legacies.
Managed Insurance Strategies (MIS)
Developing solutions for complex financial issues has been an omnipresent practice at Gottlieb for decades. MIS provides certain focused, specific and continuous administrative support services for Gottlieb companies and select clients. MIS also holds the intellectual property (IP) of Gottlieb, including the Tandem Financial Strategy℠, REAL Solutions℠, Beneficiaries’ Trust℠, iHedge℠ and other patented, proprietary and developing plans and strategies. Co-inventing and receiving our first patent in 1992, these intellectual property initiatives continue today. Patents issued and patents pending with the U.S. Patent & Trademark Office (USPTO) as well as trademarks and other IP have been and will remain a focus of Gottlieb. IP conveys a statement of our continued innovation and technical expertise converging with original thought and client care.