Every once in a while my bride convinces me to watch the Antiques Roadshow television program, which travels the country and features expert appraisers evaluating antiques brought in by real people.
We like to hear stories of someone buying an old vase at a garage sale for $10 and finding out later that it’s really worth closer to $10,000. More recently, however, it seems that the appraisers are bringing to attendee’s attention items that may look very nice but are only worth a few dollars or in some cases are even fakes.
Like an appraiser, part of our wealth management responsibility is to review our clients’ “financial antiques”- be they life insurance policies, annuities, old stock certificates, or the like.
Maybe that old whole life insurance policy is still in good shape based on the guaranteed crediting rate specified in the policy. But maybe it’s at risk of imploding because the cash value is getting lower and the premium is getting higher. Maybe our client still has a need for life insurance, or maybe she’s retired and there’s no financial need for it anymore. Maybe there’s a potential tax liability, or maybe it’s worth considering a policy exchange. There are many possible outcomes and decisions to think about.
And that annuity – perhaps it was purchased during the “variable annuity wars” of the mid-2000’s and has some very competitive features. On the other hand, maybe the product is incredibly expensive, and it’s better to simply transfer it into something better.
How about those old stock certificates? Mergers, bankruptcies, and buyouts happen all the time in the corporate world. Sometimes it can be hard to trace, but maybe those certificates have some value. It’s often worth looking into just to be sure.
Using the research and analysis skills of an appraiser, our job is to provide our clients with an independent assessment of their financial antiques, including their current and potential future value. We take it one step further by considering this advice in the context of their unique personal situation. We lay out their options, discuss the positives and negatives, and help them evaluate the alternatives. Financial advisors and appraisers may have more in common than it seems at first blush.