This Year at Heckerling – Pricing Still an Issue for Some TOLI Trustees

Insurance Trust Monitor has been attending the Heckerling Institute of Estate Planning for 7 years now.  Our exposure has grown a bit as our space has expanded and our location has improved.  And free shoe shines have made us a preferred stopping off point for attendees and exhibitors as well.

Though marketing to prospects has continued to be the focus of the event, we seem to be spending at least as much time catching up with clients we have gathered over the years, a good sign for a growing company.  And this year I noticed that a couple of “competitors” from past years were not there, perhaps another good sign?

One constant over the years is the discussion we have with prospects concerning the pricing of their services as a TOLI Trustee.  It seems that even though the industry is slowly waking up to the fact that TOLI Trustee pricing has been too low, there are still many out there who do not charge enough.

In the legal community Attorneys often act as Trustee as “an accommodation.” Some charge enough, many still do not.  And often they do not seem to have the requisite skills to truly manage a policy.  They struggle (and worry) about that fact.  One Attorney I spoke with at Heckerling had 12 policies for which he acted as Trustee.  These generated about $6,000 in annual income, a drop in his revenue bucket, but he clearly was concerned about his liability and was unsure about whether he was doing enough to mitigate it.

The pricing issue is not just one for Attorneys, but also for corporate Trustees who have not adjusted their pricing to reflect the true liability and efforts associated with these trusts.  There are a number of reasons. Maybe the client has other assets with the firm and the TOLI trust is again, an accommodation.  Maybe the TOLI trust was acquired, a “throw in” when the bank or trust company purchased a competitor.  Maybe the firm is simply afraid to charge what the task is worth.

The real issue is whether or not the asset class is getting the attention it deserves.  There is a tendency in all of us to not provide the same level of care to an “accommodation”, or a part of our business that is not as profitable as it should be (or even a loss leader.)

Last year after Heckerling I wrote a Blog entry entitled What A Pack of Gum Has In Common With ILITsThe article related TOLI Trusts to the sale of gum at the Orlando airport.  If it seems like a stretch, take a minute to read it…it will make sense.

My most vivid observation after this year’s Heckerling sessions is the same as last year’s and was the last line in that referenced Blog…..If you are in the ILIT business, be in the business.  Price your ILITs so you can provide all of the services needed.  If not, you may wish to stop “selling” ILITs.

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