Why Your Agency Needs a Private Client Strategy

So the joke I had was when you're a hammer, everybody looks like a nail, right? So you're kind of presenting the widget and hopefully somebody finds it shiny enough. I think where we differ is we don't lead with insurance, we lead with planning.

Hey, hey, welcome back to the Accelerate Your Insurance Sales podcast. Andy Neary, CEO, founder of Complete Game Consulting. I am excited today. I am joined by Dan Bergen. Dan Bergen is former head of insurance at Goldman Sachs, now managing director of private client at Higginbotham. Dan Bergen, welcome to the show, my friend.

Appreciate you having me, Andy.

You bet. I'm excited for the conversation. As I told you offline, I think private client can be an often overlooked area of what we do as an insurance agency. So that's why I was excited to have this conversation with you. Um, let's just kick it off right here. You've had a unique career, and, and we're going to get to know Dan a little bit too, but you've had a unique career path from Northwestern Mutual, where I, I did the internship, uh, a summer internship at Northwestern Mutual back in college, and then you went to Goldman Sachs. Now you're helping lead private client initiatives at Higginbotham. When you look back on that journey, because you've done a lot of big things, what experiences most shaped the way you think about serving affluent clients?

Oh, great question. So, um, you know the story at Northwestern Mutual, um, you got to earn your stripes somewhere. And, uh, I look back, I don't know that I would have changed a thing because you, you earn your stripes pretty quickly over there, or you figure out this career path's not for you. But I hate to sound like the, uh, the cliché insurance guy who watched a close family member pass away and unfortunately they were not protected, that kind of drove this initial discussions. It turns out you can help clients do a lot of different things in a lot of different ways. So, started off kind of as the guy that Northwestern Mutual was like, "Wait a second, why do you want your Series 7 in week 3 here, right? We're selling life insurance. This is what we're focused on, at least as an early process candidate there." So, I was always the guy that wanted to know everything before I got into the room. Turns out life doesn't usually work that way, and whatever you read in a book is usually 10 times different than how it's actually executed in real life. But I had a wonderful opportunity to figure out a lot about myself as well as the business, right? You get acclimated with, um, not only life insurance but financial planning, right? You get acclimated with family members, relatives, clients, high net worth, low net worth, all the different needs and solution sets, right? So kind of working your way from the ground up, right? Selling your, your buddies $50 a month policies, right? Trying to figure out how to grow the book, but also learning, um, learning how to take no for a living, right? I mean, my goodness, uh, shout out Al Granum Andy Neary from Northwestern Mutual, rest in peace. He taught us all the note card system, right? Which was this 10-3-1 process where if you call this many people and you say this amount of lines, it will equal this. And those that will continue to advance in this business will do so through the power of persistency and hard work. And turns out you can teach that. You just gotta hammer it over the head a million times, which he was really, really good at. So I had the opportunity to leave there and actually join Merrill Lynch's private banking team as an internal. And it was at that point in time where I got the opportunity to actually go learn it all. So I limited all my designations here online, but I spent that time to kind of sharpen the sword and figure out all the different things I didn't know. And it turns out there's a lot of things I didn't know at that point. Then you get involved with clients and you're actually quarterbacking these instruments because I went internal to external, which drove me down to Dallas, Texas. And you realize that what you learned in a book is certainly one thing, but the way it gets executed in real life, there's a lot of gray and there is a lot of behavioral preference that goes into this stuff, things that really can't be taught on paper. So took the time to advance the career. I went into a wholesale position at Lincoln Financial. Turns out selling a particular product wasn't a great fit for me. I always craved complexity. I wanted to have something different. I enjoyed trying to figure out family harmony, which is like one of the hardest things to solve. And it was at the time going to Goldman Sachs, starting there as a specialist in Georgia and then working my way up there that you start to see the landscape from a different perspective, right? There's some things there that over the last few years have been really, really cutting edge in the insurance world. You get to hear about philosophies and stories like the Rockefeller waterfall effect and how giving to charity does not further disinherit your family, which is kind of a misnomer that's out there. So yes, it has been a unique career path. There's, there's been too many things to shape me. And this transition to Higginbotham has been astoundingly, overwhelmingly positive. We have a lovely rule here. It's called the Thanksgiving Day rule, Andy. And I'm originally from the Northeast. That's where I was born and raised. And I always interpreted that as the no a-hole policy. Right. And it turns out not being an a-hole and wanting to have them at your Thanksgiving Day dinner table is a completely different thing. So imagine the synergies now where Higginbotham purchases our company and creates essentially this one-stop shop solution where anything with the word insurance attached to it we can do at a very deep and sophisticated level. So a true 1 1 3, 4, we're still counting, 5, 6. Higginbotham is the largest employee-owned insurance agency in the country as of current. So this, this is a train that's just going to keep on moving in the right direction because we end up taking a client-needs-first approach on all things insurance-related. And call me crazy, but for RIAs and single-family offices and private family offices who are calling, you know, they got their boat guy, their yacht guy, their plane guy, their employee benefits guy, their life insurance guy, they're all their different guys, right? They got a Rolodex of 15 people. The private client group now can offer that one-stop shop white glove service. You get one point of contact. That contact's not an insurance person. They're more of a relationship manager to that entire organization to then quarter back to the specific needs of the client. So, that person's fiduciary. They're not getting compensated on products. And they're able to solve the problem that many can't, which is tying it all together under one umbrella.

Yeah. Wow. That was well said. A couple of things that stood out there, Dan, for me, I'd love to learn a little more. And this one I didn't even intend asking you, but I'm curious. And that's actually the word I was going to use. When you go back to even the days of starting at Northwestern Mutual, when you wanted to get your Series 7 within just a few weeks, do you feel like one of the core, one of your core strengths that has helped you with your success has been that curiosity mixed with, I was going to say almost like a ready, fire, aim mentality, but hey, I want to move fast. Do you think that has— those traits have helped you lead to where you are today?

I can hear all of my partners chuckling in the background if they were here because, yes, you know, Northwestern Mutual taught me to fail quickly and as fast as possible, right? The quicker you get to 99 nos, the faster one yes is like right around the corner, right? At least that's what we all got brainwashed to think. Sometimes it took a little bit more than that, right? Um, but yes, like the, the persistency, the curiosity of this, you know. I also, whenever I do lose, I would always take the opportunity. And sometimes, you know, it's a, it's a small, small rate of, of, um, maybe 20 or 30% of the time do clients actually go down this path. But I always lob an email out and just say, hey, look, not a sales call, would love to spend 10-15 minutes, figure out like, did we drop the ball anywhere? If so, where? Mork, where do you see these dollars being invested? How are you going to solve that problem that we were talking about? I'd love to figure out if we were in competition, how did we lose? What was the winning solution? And you usually end up figuring out something new there where you're like, oh, wow, this guy was using an offshore Switzerland lender and he was hedging currency risk and he was getting rates well below what's available in the US. Okay. No, now we're off to Switzerland to go figure out who are those banks, right? Like, we want to make sure that we're on the cutting edge, but we're also not taking it too far, right? So like private placement, we'll talk about that at some point in this discussion. You know, I oftentimes make the analogy to golf, even though I'm a terrible golfer. I used to play semi-pro hockey, but golf does not translate after all these wonderful surgeries that I've had. You've got, you know, down the fairway, you've got in the rough, and then you've got, you know, out to the next hole. And a lot of this stuff that we're seeing, especially in the offshore space, is just off to the next hole. So we try to make sure that everybody's cutting edge. In fact, our, you know, our senior leader here just told everybody who's kind of new to the program, you need to start going out and getting your CHFC, your CFPs, right? Making sure that you're not just an insurance guy because insurance guys can only uncover so many needs, right? There's way more to this when you want to actually deliver something effective.

So I want to ask, totally off the subject, where did you play semi-pro hockey?

So I went out to Canada. I played in the OHL there. It was a wonderful 6-month stint. I had a kind of a freak injury. I shattered my collarbone. I didn't shatter it. I just— I displaced it, I think is the correct term. So it broke and did one of these things. And in the process, I had lifted my head up to avoid, you know, what I thought was avoiding breaking my neck. Turns out I had actually fractured my C3-C4 and I was down and I was, I was in a sling and kind of out for like 6 months. And so I never really, I had a lot of pain here, but it was also here. Right. And I didn't really notice it. And it wasn't until when I came back that I had all this neck pain, went to get an MRI and they were like, when'd you break your neck? And I was like, oh, that, that explains a lot. So it was a very short-lived career out there. But, you know, side note, they don't like us Americans playing their sport. So I don't, you know, I don't know if you guys can see it, but, you know, I got a whole bunch of, you're American, we're gonna fight you stories, but we'll save those for another time.

Did you play college hockey?

I did. I went to Williams College. I played there for a couple years and then I went prep school leading up to that. I played at Deerfield Academy.

Yeah, yeah. I'm actually familiar. I sold a captive program for a year back in 2017 on the benefits side that was designed for private schools. Deerfield was one of the clients.

Uh, so interesting, wonderful organization. Um, we, we have been doing a lot of work, or actually I should say a little bit of work, hoping to make it a lot more work in this legacy space. Um, it turns out endowments are a place that is also appropriate for the type of planning work that we do. So, um, interesting that you mentioned that.

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Oh, yeah.

And I think that's, that's important for people to hear because I see a lot of producers in our industry lose but just make excuses for the loss where it's like, no, I got my ass kicked today and I got to learn from that. What did he or she do that I didn't? So I'm glad you said that.

Well, one thing I would correct, I mean, obviously I'm the best in the country. No, I'm just joking. No, but look, I mean, there's a lot of very sophisticated professionals out there. And, you know, even some of this offshore stuff that I was joking about, you know, I, I've taken the time to be like, help, help me understand what I don't know. Right. I kind of take that approach everywhere. I don't know what I don't know. But I'm also not afraid to ask, I guess, what a lot of people would consider the harder questions, right? Like, we are in front of probably $1 billion in net worth per week, right? So the goal is to get relevant quickly. It's impossible to get these guys on the phone, as you know, Andy. So you want to make sure that you establish credibility, but you're not stepping on toes telling the pilot how to fly the plane and essentially presenting a lot of these clients at least in the space that we work with, which is the high net worth, um, there are a strong difference between needs and wants, right? Like, if you're worth a couple hundred million dollars, whether you do any planning or not, your kids are going to be okay, right? And we'll— everybody defines okay differently, but I see your head nodding. I think we would define it pretty similarly there. So, you know, it's interesting because you need to take a really different approach than you otherwise would at a Northwestern Mutual, where you're kind of always angling, selling. It's— I don't want to say it's like checkmate selling, but it's like, it's presenting. You know, the joke I had was, when you're a hammer, everybody looks like a nail, right? So you're, you're kind of presenting the widget, and hopefully somebody finds it shiny enough. Whereby here, you're trying to optimize, and that, that means different things to different people as well, right? Some people like leverage, some people don't like leverage. Some people like doing the planning, some people thinking about their own morbidity makes them sick and they just ignore it and put it off. But to be able to speak the language of a CPA, an attorney, a financial advisor, even down to a wholesaler level, has given me the opportunity to not really sell. It's more of, uh, hey, I know where this fits really, really well, and I'll say that up front, right? I think you're perfect for the type of work we do, and here's why. But at the end of the day, you know, we, we discuss, we educate, you decide. So we find that that approach in the high net worth space is just much more well-received. I mean, these guys are incredibly successful salespeople. You don't think they know when, when you're selling them something?

Yeah, you're dealing with a very sophisticated buyer. And I actually like what you just said because I think that's an untapped sales strategy that people don't leverage. Just you looking at somebody in the face and saying, hey, I think you're a good fit for what we do. That statement right there would be so impactful for producers if they had that confidence to look at a prospect in the eye and say, I think you're a good fit for what we do. Here's what I, here's what I'd love to know, Dan, because I got to believe—

Andy, and the other way. Hey, I think you're actually not a good fit for what we do. Yes, 100%. And here's why. Right?

100%. No, I was curious when you went to— correct me if I'm wrong, I'm going with an assumption here. When you made the move to Goldman Sachs, I have to believe you started dealing with a different level of wealth. Mm-hmm. What was that like? Because, because I got to believe you've used the word complexity. When you get to the levels of dealing with families who have hundreds of millions, possibly billions. That level of complexity has to put your work at a completely different level.

Well, it does too. And if you don't speak the language, you're kind of lost, right? So if a client sits on the phone and tells you, hey, you know, I did an IDGIT and I put, you know, portions of my business inside here and I've utilized the whole exemption and we've got 2 SLATs and an FLP that we've heavily discounted our real estate and we don't have much tax exposure. Dan, why are we talking about this? Right? I mean, we have clients that'll come out of the gate and say that in the first 30 seconds. And if you don't understand that statement, which I mean, it takes a really small niche audience to follow that, right? You're lost. So you had to take the time to walk through. I mean, we had some wonderful wealth strategists over there that were all typically had a background of being an attorney, trust and estate at one point in time. So they can walk you through all of the complex strategies and then you figure out, you know, there's a million different ways to skin the proverbial cat, Andy. You sit through enough of these meetings, you figure them all out pretty quickly. You also realize it's also very simple at the same time in the fact that when you pass away, there's only 3 places your money can go: kids, IRS, or charity. And so, for most of the clients that don't do any planning, I'll tend to put this as kind of— I don't want to call it a sales— it's an educational/leading discussion, but oftentimes, I'm a whiteboard guy, so I'll put up on the board or on Zoom, hey, Here's the discussion, kids, IRS, charity, right? Before we talk about any of the planning, these are usually clients that haven't done anything yet. Let me just walk through this formula because guess what, mom or dad, this is your formula, right? You tell me what you want it to say. We'll build the plan. That's very different than, hey, did you know when you die, Andy, the cost of dying is $30 million in estate taxes and you should buy this product and let me tell you why this product is really, really good. Right? So I'm like, look, if you're a $100 million client, you haven't done any planning, your formula looks like this. It's 60% to the kids, 40% to Uncle Sam, and nothing to charity. And good news, we can get you set up with the attorney. I'm sure you have the best in the country already, right? They'll take advantage of exemptions. They'll probably get you somewhere to 80/20/0. But for our most savvy and sophisticated and wealthy, for that matter, clients, what they're looking at is what's called a zeroed-out estate tax plan whereby 100% goes to the kids, nothing goes to charity, and somewhere between 30% and 50% goes Excuse me, nothing goes to Uncle Sam and 30% to 50% goes to charity. And this is usually one of those moments where the first person to talk loses, right? Because they're like, Dan, are you stupid? It's 100%, 0%, and 30%. Like, that math doesn't add up. And that's where you help them understand that, you know, unless you're worth over $1 billion, paying estate tax, I believe, is really a voluntary tax, right? There are ways to plan significantly to remove massive portions of your estate, leverage life insurance to cover the gap here, and do it all over again. I mean, we have some incredibly sophisticated clients. We have a client right now who we just showed how to move. He's got $100 million of real estate that he's fully depressed, right? Depreciated. There's not a single dollar left. He wants all of that, obviously, as many of these real estate guys do, to pass to his kids. What we showed him was a way not to just buy $100 million of life insurance to then take care of the tax and, and go ahead and pull that back. What we actually showed him was give it away to a donor-advised fund or a family foundation out to charity. You're going to pay no tax on that. When the $100 million of life insurance hits, then we're going to buy the real estate back at fair market value, and that'll allow us to then redepreciate the asset all over again, right? That's not a Northwestern Mutual sale, respectively. That's not a sale that an insurance guy is going to drive because yes, the insurance makes sense there, But the purpose and the planning behind it there becomes exponential. And that's where you create the additional alpha where it's like, look, we got the tax savings, the charity got theirs, and then the ability to depreciate another $100 million of real estate. What's that worth to you long term and to your kids?

So, well, there's a theme. Sorry, like, it's so funny when I do these episodes, I think I go into the episode knowing what I want the theme or the angle to be, but then at some point in the conversation, the theme reveals itself. I think one of the things you just have been talking about that I was like, boom, that's one of the— that's it— is in the world of insurance, right? We sell a product, commercial benefits, things like that, where let's be honest, we're not always dealing with a sophisticated buyer.

Oh, for sure.

I've sold plenty of health insurance to HR professionals or CFOs that when it comes to benefits, they don't know a whole ton. In your world, every conversation you are having, for the most part, you've got to be on your A-game because you are dealing with a very sophisticated buyer.

Yeah. Again, my partners would poke fun. The emails that I send out to clients, I apologize in advance usually, but they're— we have so many meetings and I want to make sure that we capture the important details. I tell them it's going to be very lengthy. We also offer up the planning service that we would otherwise charge clients for if you're the right client there. And we find— I'll oftentimes tell them, like, look, if you're not interested in any of the insurance solutions that we've provided, take us up on the planning. It's not going to cost you anything. I promise you, you're going to find some stuff there that's probably not obvious. You would be shocked how many high-net-worth clients Andy Neary have. They know they have enough money to spend. They have no idea how much money they're actually spending. And when you put it to paper, it reveals a vastly different story than they were thinking in their head. I mean, just that simple exercise, right? So I don't even ask clients anymore. I'm like, I'm going to ask you in an email, but think about it. What's the most you've ever spent in a year? Let's just plan for that, right? On a go-forward basis. But and then it's the difficult questions where you got to figure out like a lot of blended families in today's day and age. So you need to, you need to respectfully be able to navigate those conversations in a manner that is blunt, but not too blunt, but also understanding that, I mean, look, if you tell a client who is terrified about giving his son $20 million that he could now give his son $50 more million, you just made his problem worse.

Right.

And whether or not on paper, economically, logically, whatever you want to describe it, it makes all the sense in the world. This client's never never moving.

Yeah. Well, and I hear a lot of advisors in our industry talk about, "I'm great at helping solve complexity." But for most, it's the complexity of ignorance where I just don't understand what I'm buying. In your case, it's complexity because they are so sophisticated, they have created a world of complexity because of the mass wealth they've accumulated.

Yeah, it's also, um, you know, we also get— there's, there's quite a lot of people, Andy, that are worth a few hundred million dollars that are not as sophisticated as you may think. Um, you know, we, we also deal with the classic case of, um, the cobbler not having any shoes, right? So we, we help guys who own life insurance companies procure life insurance. I mean, how dumb does that sound, right? But this, this happens all the time. I think where we where we differ is we don't lead with insurance, we lead with planning. So if you're coming to me as a fresh client who's done no planning, I'm going to try to get you from 30,000 feet down to 3, give you some ideas. So when you then get guided to the estate planning attorney to do your basic wills, trust planning, revocable living trust, right, healthcare proxies, all this good stuff, like you need that in first and then you need to look at leveraging your exemption to the extent you're comfortable before we even figure out do we have an estate tax problem? And by the way, spending more money in retirement is a real strategy, right? Can you guys spend this up? No? Okay, so would you agree we have a problem, right? Some people are like, screw my kids, I'll pay, let them pay the taxes, I'm dead, right? And you're like, okay, let me, you know, that's going to the government. Just so we understand this, like we could redirect this to charity. Maybe we start there, right? Before we, you know, before this is behavioral meets financial preference. And yeah, it's a sticky situation sometimes.

Yeah. Yeah. How do you, you know, with that level of sophistication though comes some very high expectations.

Oh, yeah.

How do you as an advisor, I think this is important to discuss because again, because of what you're dealing with, expectations got to be off the charts. How do you make sure you and your team are always willing, able to step up to meet those expectations?

So we have a phenomenal, phenomenal team. And the fact that we all row the boat together here at Hagenbotham being employee-owned, I think is everybody's got skin in the game and it's a wonderful, wonderful thing. We are also not shy about recognizing and rewarding those on the team. I mean, if you saw a list of our weekly, you know, wins and, you know, closes, if you want to call them that, they're all shouting out the other team members on the team. Like, this was a disaster from underwriting. Crystal, my case manager, helped them navigate, you know, hours and hours of negotiation. And so on and so forth. I think overcommunication helps substantially. Making sure to address any egos in the room, whether that be the client or his advisor or his attorney who says, you know, this is stupid, we don't need life insurance, why are we even talking about this, right? Oftentimes, financial advisors will look at insurance people as kind of the other side, if you will, the dark side. It's like, this guy wants to take money out of my portfolio to buy a product that he's going to get paid on that I won't. I don't know what the strategy is, Andy, but I already hate it. Right? Like to be able to say, look, I'm not trying to do that. Right? Let me wait. I wish I had a white flag. I would just wave it. You know what I mean? Like, this is not— we're not in the business of breaking relationships, stepping on toes. So I think to be able to quarterback that without, you know, sometimes looking like the quarterback. Right? Just asking the logical next questions. Like, does it make sense for us to start drafting the trust here? Have we reached that point? Right? And by the way, no is the second best answer, right? Like, as we kind of talked about. So if we, if we find that we're starting to put square peg round hole, I mean, we turn down probably 1 out of every 5, 1 out of every 6 cases where a client on paper, you know, like the real pick on the real estate guy, half a billion dollar real estate guy doesn't have a couple nickels to rub together for collateral. Not a good, in my opinion, candidate for premium finance because I never want to be between his next real estate deal, his liquidity, and a collateral call. No, thank you. It's a horrible place to be. There's a lot of other people that would be like, $100 million, sign him up, right? And his banks are yelling at him and his advisors yelling at him and he knows he needs it. But I'm helping him guide it to a soft landing. Right. Let's get some big term insurance. God forbid something happens. But when you want to make this permanent and address the estate tax issue, you need to start socking liquidity away. Right. And not for now, for the next 10, 15, whatever the schedule may be. These conversations take a while. These are, these are, you know, these are 6, 6 months on a, on a good, you know, on a good transaction where a client's super healthy, their estate planning attorney's on it, they're liquid, right? They don't have to move things around. They've already done planning all the way out to, you know, we're on 3 or 4 years with some clients. And when you start dealing with, with people in the billionaire space, um, everybody works for them and nobody can ever make a mistake. So you need to make sure that those cases get addressed as such. And those will be things where we're going to go out of our way to make sure, is this offer actually firm? We want to execute now. We're ready. Oh no, they need 19 more things apparently, right? Like, okay, let's go knock those things out now so we don't have to deal with, you know, what the hell is this from the client type of thing, right? We try to do that for every client. I mean, it— the difference between a $100 million client and a we have a client right now who's worth $29 billion. I didn't know they got that big. Um, the, the level of service really needs to be the same for both, right? Like, and then, you know, a lot of the friends and family we get introduced to at Higginbotham are not $100 million guys, but they're friends and family of Higginbotham. So they may even arguably get better treatment, right? Where we're trying to, to work on their behalf. So, um, you know, we take a fiduciary stance in a lot of directions. We do get compensated by insurance. So that's the obvious asterisk there. But if, if I wouldn't do it myself or for my family, like, you're probably not going to get introduced to it.

Well, and you reminded me, I remember my first position I took where I really had to step up in the insurance industry because I was now dealing with some pretty high-level CFOs, CEOs. And there was, there was actually an excitement to it where you knew when you were going into a meeting with that client, you had to bring your A-game, you had to be prepared. They're going to put you on the spot, they're going to test you, they're going to challenge you. And I think there's a there's an excitement working with a sophisticated buyer where you can't just wing it. You've got to come, you've got to write, you've got to be ready to go. And so, uh, I'm glad you brought that up. You brought about— you still said at the end of the day you guys get paid, you know, sell insurance at, you know, when it's appropriate. Talk to me about private placement life insurance. You said that's being heavily discussed these days.

Uh, yeah, yeah, it's funny, we arrive at the same conclusions for things and describe them differently. You know, I describe it as, uh, the fear of screwing up and the adrenaline of doing it well. Right, with these clients. So that's, that's the excitement leading up to it. But yeah, so, so PPLI, um, there was a, uh, a gentleman, there was a couple people like Goldman that, um, were very positive outlook-wise on this particular structure. It's been around for more than two decades, if you can believe it. Um, but this in a nutshell is a very tax-preferenced item that high net worth clients are looking to move highly appreciating assets towards. And if you look back quite a few decades ago, um, a very smart a bunch of individuals figured out that I can use the same tax code. And for the nerds listening, it's IRC 7702. It's the same tax code that allows life insurance to have the treatment, if accessed appropriately, of taking tax-free distributions from it. So, post-tax dollars going in, tax deferral during ownership of the policy. If accessed through policy loans, we get tax-free distributions. And so, I imagine these folks were on a hill somewhere yelling, "Look at everybody. We have a tax-free—" instrument here that is not just filled with retail insurance funds, right? More importantly, it's not filled with commissions and fees, and it doesn't have these extended surrender charges, right? Not throwing any shade at any whole life products or any carriers, but if you look at some of these designs, you put $100,000 in for 10 years, and in year 12, you have $1 million of cash. In the private equity world, you should have tripled your money. By then. Forget taxes and tax-free nature of the product, right? So this is kind of a combination of both of those strategies. Um, version 2 of this, once people got into this structure and were like, well, wait a second, it's tax-free, but like, it's not insurance funds, but I have like 4 other funds to pick from, right? So it was a very slow process then until you saw version 2 of this where, you know, it was maybe like 10 to 15 other core names got into this space. Which really started to bring this strategy to light, so much so that folks like Senator Wyden were scrutinizing these things very, very closely. But if you read some of his documents and articles that were written, it's never really the game that he's contesting. It is the rules of the game and how they're being played. And we'll touch on that in a second. But you're seeing now version 3, version 4, version 5 happened very, very quickly. Which version 3 was, we have a whole bunch of investment options now, but the fees that you would see being charged on these instruments from like an agent like myself's perspective would be like 200 to 250 basis points every year on a $100 million block of business. It's like, well, so what, what are you doing for that money every single year? And guess what? When you compare that to paying federal income tax at the highest bracket, it still makes sense. But I think the saying that we abide by here is pigs get fat, hogs get slaughtered. We charge 25 basis points in this space, right? This is not a moneymaker for us. This is a relationship value-add deepening for the client and the people that we work with in the RIA space. Said differently, this is a way where the finance and the investment guy can row the boat with the life insurance guy. Each of them are taking their respective fee, and guess who wins the most here? It's the client. Guess who loses the most here? Uncle Sam. So, you know, to oversimplify a fairly complex conversation, 99% of what you're doing on a Schwab, Fidelity, or otherwise retail platform, right? You can do the exact same thing inside of a tax-free structure. And it's a really simple comparison. They say your health is your wealth, so you do have to qualify for it. But if I were to show you like $10 million in a trust invested at 9% over the next 30 years, it grow to about $38 to $45 million depending on the blended tax rate you want to assume, portfolio turnover, et cetera. The PPLI structure is going to push clear over $100 million, right? So the second line item here is, I joke and I'm like, just pretend it doesn't say life insurance on here, right? Like don't look at the life insurance thing, right? It is life insurance. I have to tell you that, right? But here's how it works. And you're essentially trading off the cost of insurance, right? My fee, M&E, COIs, the financial advisor, if he's going to manage the account here as well. For no federal and state income taxes. So there always has to be an insurance need here. But when you look at what a lot of clients are doing, which is take a whole bunch of stuff, move it outside of their estate, let it appreciate there for the next generation, the government knows what we're doing there. So these tax structures, if you've ever investigated, have a horrible tax system built into them, right? There's no progressive tax bracket like you and I have. It's anything over $16,000 worth of income taxed at the highest bracket immediately. Right? Government's trying to get some other money back, right? So to put a wrapper around that over an extended period of time, forget looking at multi- and intergenerational planning, you can create systemic portions of wealth. We call it structural alpha. You're doing this here, we're just going to do this here. We're going to amplify the yields over a long person, a long period of time, and we're not going to take any additional risk. So it's not a, it's not a massive moneymaker for anybody if they're doing it correctly, right? And taking the client's best interest at needs. And I mentioned before, probably before we chatted, you know, hockey, not a golfer, but I imagine these are what golfers talk about on the golf course, right? Like, you'll never believe what this guy did. What are you talking about? He took my private credit fund, which has been killing it, 15 to 18% per year that I'm paying 50% tax on, by the way. And he stuck it inside this structure. It's the exact same thing I'm doing. By the way, you can access Goldman's, Millennium, Bain Capital, Gallup, Apollo. These are all the big names that these wealthy sophisticated clients are either being exposed to or looking at. By the way, we have all the boring stuff too. You want a Vanguard no-load S&P fund, you want a collared structure, no problem. But it allows a guy like me to ask kind of stupid questions to really smart guys where I'm like, you don't like paying tax, Andy, do you? All right, just making sure. I just want to make sure, right? Has anybody ever showed you— I see you got like $20 million sitting with Millennium. Has anybody ever showed you the tax-free version of their fund? And their jaws drop. Yeah, right. And they're like, what the hell are you talking about? So, um, it's a great partnership. And turns out these guys all have retail insurance needs anyways. So it, you know, it's a great way— you know, we joke and say, how often can you help a client deploy, you know, $100 million of PPLI life insurance and then come back to them with a really good life insurance idea and say, "Hey, by the way, we could use this as collateral now to finance another $30, $40 million of liquidity for your family." So, that's the book we're writing if you combine—

I was going to say, talk to us a little bit about you. You got a book in the works, Taxes for Thee and Not for Me.

Talk about that a little bit. So, it's an exact combination of these two strategies. We're presenting to Tiger 21 next week and it's a little bit of a of a taxes for the, not for me story here. But a lot of these smart guys have been pitched both of these coins before, right? Hey, you should look at PPLI if you're looking for investment alpha, or hey, you should be looking at insurance, or finance insurance for that matter, because you don't have any exemptions left and you still need a whole bunch of liquidity. But nobody's really shown them how to tie it all together with their planning, right? Like, I'll talk to you about that real estate transaction that we just went through, right? Like, anybody that's on the fence and considering that strategy, when they realize like Well, wait a second. I've got $50 million in a trust here. I'm going to save $30 million of taxes by doing this PPLI strategy, right? So maybe I take the tax savings each year and I delever my financed vehicle over here, which is going to solve for whatever liquidity I need for taxes, which will allow me to do something sophisticated like donate a massive portion of my real estate, buy it back at fair market value and discount it on. So that's where you're not just taking like the savings over here, but you're amplifying the liquidity over here, and then the planning is going to get you further depreciation over there. I mean, I'm taking a guy worth $200 million and I'm saving him $100 million of tax over the next however long the time period is. If I need to have them come out of pocket to pay a couple life insurance premiums or some interest along the way, it should be an absolute no-brainer as opposed to You know what a lot of guys will pitch these high net worth guys is the story of death and taxes where it's like, do you realize that, you know, if you're a $100 million client, you can exempt $30, $70 million at 40%. The cost of dying is $28 million. And good news, we have a product for that, right? And it's $300 grand a year, every year until you die. And the client's like, why am I right? Why am I buying insurance? All right, so the government doesn't get my money. Like, that makes sense. But then I'm going to write $300 grand a year every year. So my kids get the full $100 million, which is $100 million more than I ever got. Like, man, that's a, that's a, that's a tough sell. So to be able to tactically create the alpha here, and then insurance is just a byproduct if you're doing this correctly, right? Like, all right, we've done everything. We still, you know, do you, do you want to give another $50 million to the government? Because that's, that's where a lot of these super high net worth clients, some of the best in the, in the world. Their plan is to pay $100 million in estate taxes. Like, that's— and they're being told they can't do anything about that. Yeah.

Yeah. Well, I think the key point there is a lot of people go in with the selling of the insurance being the goal. At the end of the day, it's just a vehicle that is part of the conversation that helps create the outcome they're looking for. And I think one of the things you've definitely demonstrated in this conversation, Dan, is, you know, you're a very curious person, which is what's led to your success. You move quick, you're a constant learner. And I think because of the type of client you work with, they're the same way. They don't get to that level of success they've gotten to without being curious, without being a constant learner, without having a desire to get better every single day. So when you're bringing these ideas to them, they're like, Tell me more.

Even when we lose, sometimes we win. So we had a billionaire client. This lends to the offshore discussion we were having, and he pulled me aside and he was like, yo, you lost. And we probably were 300 hours in. And I was like, all right, help me understand where I lost. And he's like, we're getting these rates, they're much lower. And I'm like, there's no way, dude. And he's like, I'll send them to you. And he sent them to me and I'm like, all right. You know, I was middle of exploring a crypto project on his behalf, way over my skis in terms of expertise, but going out of my way to demonstrate the type of service service that we provide, right? Yeah. We had, uh, met with his doctor personally. He had some health issues to figure out. Like, we took this guy out to dinner, like, hey, here's where I need his scores to be at. How do we get there? I need a, I need a doctor's recommendation. Are you comfortable writing these things, right? And then in the process, had introduced him to some very savvy, um, private equity guys who helped him deploy, you know, $15 million into SpaceX pre-IPO at a very, very good price. So, uh, we were able to use, you know, what what others would consider like non-revenue generating activities, to actually turn around and be like, hey, you know what, pending where SpaceX goes, like, I think we won this case. Hear me out, right? And by the way, point me in the direction of these Swiss banks, we'll go get those rates too. So we ended up turning that loss into a win, uh, which, you know, again, does not happen often. I'm not going to sit here and pretend like every billionaire that we come across we snag, but We were able to deliver something special. And by the way, we're doing, you know, he's got hundreds of millions of real estate that we're able to deploy property and casualty on and save him a few dollars in the process. All right. So, you know, we try to just, we try to just do what's right by the client here. I mean, I think that's the overarching Higginbotham theme. And if I were to send an email right now, even on this podcast to say, hey, has anybody heard of this firm? I'd get like 60 responses by the time we were done, right? Just people willing to go out of their way to help, which is It's huge. Yeah. Well, it's been an awesome conversation, Dan.

I would label it a very sophisticated conversation. But before we wrap, I always give the audience a chance to get to know our guest a little bit. I don't prepare you for these questions. Oh, here we go. I am a man of habit and rituals and discipline, so I'd love to learn a little bit about yours. So, you ready? I'm going to fire a couple of questions at you. You get me your best answer. I am a big morning routine guy. So I love how I start my days. Dan Bergen, what is your morning routine look like?

Oh, I've got a fun one. So I'll spare you the supplements, protein shakes, but we put in a sauna here and moving over to Florida. So I'll wake up, I'll hop in the shower, I'll hit the sauna, get that thing working, come down. I end up taking either 2 saunas or 2 showers or I pop over into the pool, but usually somewhere between 25 and 30 minutes around like 175 degrees or so. I come out, I have a cold plunge. I usually hit that. I have a, like, a pretty distinct set of workouts that I do. It's a whole nother discussion. So coming out of the hockey injuries, I found a biomechanics, a biomechanics system called Functional Patterns that absolutely saved my life. So I go through a pretty specific routine. It's helped me take 46 degrees of scoliosis down to 13. Right, so it's— yeah, it's been, it's been absolutely life-saving. Um, usually then, uh, the kids are up pestering my wife, so I run in here, we spend some time having breakfast. It's been nice moving to Florida because the kids don't get started till 8:30, whereas in Atlanta they were on the bus by 7. And then I'm usually, uh, call it like 8:30 to 8:30. I mean, it's, it's— I work a lot of West Coast hours too, so it's usually, usually 12 hours of just kind of running and gunning. In fact, I have an email in my inbox of my boss saying, uh, we're sending you and your family to Disney World, we I need you to just take 4 days. And my response was, 4 days, 4 days in Disney World with my kids probably sounds a little more stressful than working, but we'll figure out, we'll figure out where else to go.

Yeah, well, I think you answered my next question, which is, if you have 60 minutes to do a workout, what is your go-to workout?

Yeah, so, uh, you know, just some insights into this program. So it's a biomechanics system. It kind of goes a little bit against the grain of what a lot of people are doing. So there's no stretching involved, there's no traditional weightlifting involved, but it all is evolved evolved. It all is centered around gait cycle and how we evolved to move as humans, which was stand, walk, run, and throw. And so all of these movements, like I'll pick on squats, right, because I was a hockey player, I must have done millions of squats, right? It turns out there is no study that correlates a stronger squat to a faster sprint. You'd think by getting your legs bigger that that would be what, you know, what it does. It turns out that's in fact not the case. If you've ever done heavy squats, which I know you have, you wake up the next morning and you're Wow, my legs are absolutely shot. Um, when you, when you are— I mean, that's not how we move, right? It's, it's when you're running, walking, it's 50, it's 100% on each leg as you're moving, right? Whereas squatting is 50% each of the directions up and down where we're rotational. So when we hit like deep legs type stuff and you're building in rotation to it, uh, you wake up the next morning actually feel like, like springy in a way. There's no like dead muscle type soreness. So it's funny, I have a couple— I still do this on the weekends because that's like an even bigger passion of mine, right? I found one kid who fell out of a tree, uh, back in Nashville when we lived there. And, uh, my, uh, one of my cardiothoracic clients was a good friend of mine, and he was like, would you mind taking my kid through this stuff? I've seen it work wonders for you. So we took him through. It was like maybe 4 weeks until he turned to his father and was like, Dad, he's like, my everything feels better, right? And like, he cried, I cried, I'm about to cry now. Like, and I was like, oh wow. Like, I thought I was weird, I had all this pain at a young age. Turns out like people got some stuff, and even the super high net worth guys got some stuff. Yeah. So some— one of the clients we work with is a, is a pro pitcher, and turns out, you know, walking and running is a spiral from the top down. So you're moving arms and then legs, and then— that's just why the guys with no feet can still run at the Olympics. Guess what they can't do? They can't throw any heat on the mound, right? Yeah. Because that's a spiral from the ground up where your feet go and blah, blah, blah. So, uh, you know, I pick on these guys. I'm like, you're the worst runner on the team, aren't you? And he's like, how did you know that? I'm like, because you're the best thrower, and these are completely opposite, right? And so I, I really hesitate with some of those guys because I'm like, your pitch is probably going to get worse before it gets better because you have a big anterior oblique sling here that's just like over, overpowered. I'm going to try to build the shit out of this one because if you can put this over that, think— and they're like, oh yeah, that makes— is that why this hurts, that hurts, this hurts? And I'm like, yeah, bro. Like, but, um, it's just been a great way to help people. And then also, we, you know, I'm like, if you think this is cool, you should see what we do over here, bro. Like, yeah, yeah. It's a great way to organically meet people.

I hope you take care of your body. Now, let's take care of your wealth. There you go. Well, Dan, this has been a phenomenal conversation. Thank you for taking the time to do it. If somebody listened, got inspired, wanted to reach out to you, what would be the best way to get in touch with you?

Sure. So, I'll give both because I may get some contacts about this functional pattern stuff. Email is dbergen@higginbotham.net. So the net will throw people. Cell phone, if anybody cares, 215-622-6646. Just shoot me a text ahead of time because I usually don't answer random phone calls. But yeah, I'm happy to, happy to take any sidebar discussions. By the way, you did a phenomenal job. This was a pleasure. Appreciate you. We covered none of the questions that we had planned, but that was, uh, typically it's how it happens, but it always ends up being a great conversation.

But, uh, for those listening in, uh, this, this was a conversation about taking your to the next level, how to, how to engage with very sophisticated buyers. And I hope you took a lot away from a man who's had a lot of success in the business and what it takes to do it. Be good.