When it comes to Private Placement Life Insurance (PPLI) and Private Placement Annuity (PPA), the firm that supports you must be one you trust implicitly. It’s a business where every detail must be tended to with care. The team at Private Risk Capital Development Advisors, LLC, or PrivateRisk, have made it their business to be exceptional, an achievement acknowledged as they receive the award for Best Independent PPLI Solutions Provider 2020 – New York in this year’s Global Excellence Awards.
Life insurance is an industry that has evolved slowly, but dramatically over the last two hundred years. Much of these changes have come from clients of a high net worth needing more creative solutions and these changes are often swiftly adopted by the industry at large. This means that there are two sorts of life insurer. Those who adopt the changes that work best, and those who innovate constantly to create something new.
The team at PrivateRisk have made it their business to innovate. Current President and CEO Brad Barros formed the company alongside two other leaders in tax law and life insurance. The aim was to create solutions for these high net worth clients and their families as an alternative to the mass-market products that don’t make the best use of what assets are available. The success of the company is self-evident, with the business taking on a global aspect when it comes to the design, formation and support of bespoke PPLI and PPA strategies.
Starting with a consultative approach, PrivateRisk has earned the trust of hundreds of clients. A team of independent advisors, selected for their formidable knowledge and expertise in the use of advanced life insurance strategies to solve complex tax and estate planning challenges, were brought together to create the nucleus of the business. With many clients bringing their own teams to a project, the PrivateRisk model is to work alongside these professionals so that the best possible solution can be created for an individual situation. The focus is consultative in order to protect and amplify the capabilities of clients and their wealth management team. As the old adage from BASF goes, “We don’t make the colors, we make the colors brighter.”
Making the colors brighter involves exploring more deeply the ways in which clients can be affected by a variety of risks and excessive taxation. Over the years, the team at PrivateRisk has been able not only to finetune their approach, but specialise in privately held wealth, more specifically business holdings, real estate, and privately-owned investments. The polices that PrivateRisk puts together have been so successful that they are now known in the industry as PrivateRisk Policies™.
These bespoke insurance policies are designed to hold business assets as well as traditional investments, enjoying the same tax advantages as traditional life insurance, namely tax advantaged growth on all policy earnings, tax free access to the policy cash value, and tax-free death benefits. Of course, this is entirely dependent on the policy’s design. Where this proprietary approach differs is in its commission-free status, as well as the menu of investments inside the policy cash value not being limited by the issuing life insurance company’s portfolio.
The lack of commission is incredibly important to the team at PrivateRisk. It is what separates them from brokers. No team member profits from any investments that they package and sell to clients, and no one in the company is involved in mass-market PPLI policies. Independence is crucial not only to the firm’s business model, but to the team’s ability to continue delivering exceptional results to clients at a lower cost than the mass-market PPLI fund groups and brokers. Free to be thoroughly creative, the solutions that come from the minds behind PrivateRisk are always guaranteed to serve the client first and foremost.
The clients that PrivateRisk work for vary tremendously, with family offices, hedge fund owners and managers, unicorn investors, private equity funds, entrepreneurs, real-estate investors and operators, professional athletes, musicians, artists, medical service providers, and other wealth holders in the US and across the globe. Ensuring that each and every one of these clients receives the specific and necessary support is key to the company’s success and is why the team have collectively managed to protect billions of dollars of wealth in the US and around the world.
The importance of a world-class staff to support this exceptional business cannot be overstated, and it’s a credit to the team that they have managed to win this award in New York when put against companies such as Goldman Sachs and Blackstone. While the bespoke approach is one that came with the company, it is through the team that each client is able to find assurance and trust in what is to come. What the expert team of legal, actuarial, accounting and risk management specialists brings is unique experience and professional acumen. For clients, this means very simply that everyone is always working towards a common goal of ensuring the most possible return on any investment.
Looking ahead, a number of different areas are set to change the way in which the life insurance industry is operating. First and foremost is the way in which the traditional landscape of the market is changing economically, with low interest rates potentially leading to an “extinction event” for carriers who will no longer be capable of sustaining profits while also covering the cost of reinsurance. This means that the team are finding a growing number of wealth-holders who come to them seeking bespoke PPLI alternatives to traditional life insurance solutions.
That said, the low interest rate environment has led to people collateralizing the cost of insurance in lieu of capitalizing the expense. This will no doubt continue as long as the spread between short term lending rates and private equity investment return remains meaningful. Finally, the wealth planning industry is changing as a whole. What used to be an exclusively commission-centric practice is transforming into one that is increasingly fee-based. Educated clients with significant wealth can now turn to low fee-based and commission-free PPLI solutions that allow them to keep more of their wealth and generate tax-based alpha through life insurance.
Despite these times of change, the team at PrivateRisk see great potential and have expanded in terms of infrastructure in order to consolidate the global market interest in their services. Key hires and cutting-edge technology have been combined to create a one-of-a- kind user experience that is available through affiliated experts in new market centers. As the influence of the business continues to grow, it has been able to establish family offices throughout the US, as well as in Asia, the Middle East, Latin America. The most recent development has been in the United Kingdom. There is a great deal of potential in all of these sectors for expansion in the coming years.
In the world of life insurance, what makes PrivateRisk different? Clearly, an ability to provide clients with a way forward that matches their exact needs is tantalising in and of itself, but for clients, it is clearly the execution that is always exceptional. More than being satisfied, clients feel safe when working alongside PrivateRisk. It’s this sense of security that has led to such success.
Company: Private Risk Capital Development Advisors, LLC
Contact: Brad Barros