Magazine article American Banker

Hartford Touts Estate-Planning Strategy for the Bank Channel

Magazine article American Banker

Hartford Touts Estate-Planning Strategy for the Bank Channel

Article excerpt

In another effort that focuses on the high-net-worth client, Hartford Financial Services Group Inc. is pushing what it calls a capital enhancement strategy in the bank channel.

The Hartford, Conn., company has long targeted the affluent through banks, and this strategy would put more estate planning products, like variable universal life insurance, in the hands of small-business owners, who generally have tight relationships with their banks, said John T. Gies, the insurer's director of individual life insurance sales through financial institutions.

"The ideal candidate here is an owner of a closely held business, a professional practice," Mr. Gies said. "A law firm, doctor's office, dentist, contractor, even a car dealership, could fit into this strategy. All of these business owners have a relationship with their bank, and there are six million small businesses in the U.S. Most of them are closely held, meaning they are owned by a single individual and one partner and have fewer than 500 employees."

The capital enhancement strategy advises businesses to use their illiquid assets to buy life insurance, which Mr. Gies said many employers would not buy otherwise.

"For many of these businesses, we can safely say that they get a better return on equity on their liquid assets if they reinvest it into their core business," Mr. Gies said. "But what about the value of real estate, inventory, or equipment? That can be leveraged for asset accumulation purposes."

Banks have two potential roles in the strategy, Mr. …

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