This month, our CEO, Jay Judas, talks to Eleanor Johnson, Founding Principal, Highland Capital Brokerage. The pair discuss Eleanor's "three bucket" concept for planning, the power of storytelling, the benefits of Forum 400 and some places to grab a bite in Hawaii. Read on to learn more!
JAY: There is virtually no one I can think of who has given back to the life insurance industry as much as you, Eleanor. In proving the point, next month, January, is when Forum 400’s Annual Meeting is being held in San Antonio, where you will be named as incoming board President. You previously served on Finseca’s board when it was the Association for Advanced Life Underwriting (AALU) and remain influential as an advocate for our industry to elected officials. In addition, as a popular main-stage platform speaker, you selfishly share personal stories in helping to motivate your peers.
All this recognition stems from a successful career as a producer and leader. Let’s get started by hearing about your work as a Founding Principal for Highland Capital Brokerage.
ELEANOR: Jay, I was so happy that you reached out to have this interview. Thank you for including me in the Tier One Series.
As you know, this is my second round at Highland Capital Brokerage. For the first 25 years, I ran the ten-state northwest region and was on the board when we recapitalized Highland into one company that consistently provided exceptional resources to both independent agents and institutional customers across the country. After Highland’s sale in 2014, I left to take a national position with John Hancock, where I had the opportunity to work closely with various BGAs, Producer Groups and institutional accounts, and was often the keynote speaker at their conferences. I cherish the relationships I developed during that time and continue to enjoy today!
I returned to Highland in a different role during COVID, joining what would become the new “Signature Private” division, a select group of client-facing professionals who specialize in working with advisors and clients in the ultra-high-net-worth space.
JAY: When we last spoke, we both used the term “forward-facing” to describe your role in the life insurance industry. By this, we mean that you meet with end clients to determine if life insurance is a fit and then help them to purchase coverage. In other words, you “produce revenue.” While this role is performed by thousands of licensed brokers and agents every day, it was uncommon for a woman to be a successful forward-facing producer in the high-end of the market when you started. Tell me about your upbringing and your path to where you are today in the life insurance industry.
ELEANOR: I actually feel that empathy and intuition, which are characteristic in many women, make them very well suited to be successful insurance producers. The challenge historically has been getting the right opportunity.
Like a lot of women, I started in a sales support role, working for a highly successful M Financial Group Producer. My initial client facing interactions centered around explaining complex case design or “fixing” policy service issues. This is where I developed my appreciation that “keeping things understandable” instead of constantly using complex terminology or acronyms, is a much more effective way to communicate with clients and other centers if influence. That experience, along with the 40 years that followed, also informed my perspective that focusing on solutions that are more straightforward and have the highest probability of success almost always outperform over time a “sexy” strategy with too many moving parts. I am sure that you can relate to many examples of this!
My “big break” occurred when I was tapped to run the Manulife office in Seattle and began meeting directly with clients of advisors who were looking for insurance or planning expertise. Successes there led to being recruited by Bob Lee, founder of the RE Lee Group, which later became Highland. None of these opportunities would have happened had it not been for great mentors and colleagues willing to “risk” putting me in these new roles and expecting that I would figure out how to succeed.
JAY: In preparing for this interview, I asked you about the top areas of concerns held by your clients and for which you help to resolve. You did not hesitate and said, “Long-term care, income replacement and wealth transfer.” Then, you touched on how approaching planning by addressing “the three buckets” facilitates your work. How so?
ELEANOR: The idea of planning is often overwhelming for clients and many advisors start the process by focusing on what that advisor believes is the client’s primary need and asking clients to complete complex fact finders. Early on, I would join a client meeting with solutions to “fix” the problem the advisor specified, only to discover that it was not the issue that kept the client up at night or, at least, wasn’t their first priority.
It is also important to recognize that providing solutions to a problem that the client doesn’t recognize they have or want to fix is a waste of time. The puzzle became, how to get information as quickly and organically as possible, how to empower the client to articulate to us their priorities and how to narrow down solutions based on the specific planning gaps and the assets available to work with to solve them, all while enhancing the relationship that the advisor has with the client.
To do this, I started using a simple level setting conversation with clients, advisors and centers of influence that takes away acronyms, and helps clients understand and prioritize planning gaps by introducing the concept that any assets fit into one of three buckets: Lifestyle, Risk and Legacy.
Lifestyle: These are the assets that you use, touch and enjoy during your lifetime and the assets used to generate that lifestyle. We want to fill this bucket to capacity and beyond, so that you can live the lifestyle you want for the rest of your life. For most people, managing this category is an ongoing process that includes regular portfolio reviews.
Risk: This is anything that can go wrong for you and anyone you are responsible for. Many people self-fund these risks, so if we are able to insure those risks or put guardrails around them, capital may be freed up for other uses.
Legacy: Once the first bucket and second bucket are both full, if there is one dollar left, then, by definition, it is never going to be used during your lifetime, even in the worst case, so it is for someone or something else. This could be kids, grandkids, charity or others. The idea here is that once those assets are identified, the question becomes how the asset should be moved around, restructured or called something else so that it is worth more in the hands that it is meant for.
JAY: You like to take the approach that planning is a math problem. In effect, you are asking clients to take the emotion out of the transaction. I agree and see this frequently with clients deciding about private placement life insurance. You run into this quite a bit with wealth transfer planning and how those with illiquid estates might handle purchasing life insurance. Can you elaborate on this?
ELEANOR: The “math problem” in this context refers to opportunities to reposition third bucket assets so that they are worth more in the hands of those they are meant for. Specifically, you are not “spending” first bucket lifestyle – rather repositioning principal or interest of an asset that you will never use during your lifetime. Planning opportunities here could include moving assets into a multigenerational trust, repositioning some of the cash flow into insurance products that result in a predictable source of tax-free liquidity that enhances other planning, charitable planning strategies, etc.
I have found that even clients with very liquid estates can benefit from planning strategies incorporating life insurance because of its unique ability to provide an immediate source of tax-free liquidity. Adding Insurance to the “math problem” of overall third bucket asset allocation will also allow more flexibility to the advisor for how the remaining assets are invested, often resulting in a higher overall return.
JAY: Over the past decade, you have spoken at dozens of industry events all over the country. Traditionally, you have told four stories to motivate your peers and, recently, added a fifth story. How did you come up with this and what are you communicating through your stories?
ELEANOR: I truly believe that the best way to communicate about planning concepts is through storytelling. I tell a real-life story relating to each “bucket” that may have some twists and turns and tangibly demonstrates what can happen and the true value of the planning that we are all able to do for our clients. Some people call it “they why” of what we do. I have had folks gasp or break into tears when a story hits home with them. It is that emotion that also motivates action and encourages advisors to risk asking their clients questions that they may have thought to be uncomfortable.
As you know Jay, the last story I added in recent years is a story of the impact to a family on planning, or not doing planning, for long-term care, especially when the long-term care event occurs during the working years instead of some far-off post-retirement date that most people envision. I share the physical, emotional, and financial impact to family members facing a caregiving crisis and how having the resource of LTC products encourages you to use the services sooner, even if you could afford to pay for them out of pocket. It is normal to try to handle things on your own for as long as possible - but the lasting effects are very real.
I disclose at the end that this is my family’s story. My husband, Gary, was diagnosed at age 59 with Frontotemporal Degeneration (FTD), the most common form of dementia before age 60. He went from a fully functioning executive to a “toddler” within a few months. This disease can manifest itself as early as patient’s late 20s and is gaining some recognition because of the diagnosis of celebrities such as Wendy Williams and Bruce Willis. Having wonderful caregivers who could do the “heavy lifting” provided my daughter and I the opportunity to “choose joy” during that last two years and three months that Gary lived post diagnosis. I never expected to be the poster child for the value of insurance but am grateful for all for the planning we did. I have written a couple of articles about this, for those interested in learning more.
JAY: I have a confession to make. I used to make fun of Forum 400 because it seemed to be just a handful of elderly producers who looked alike and served clients who looked alike. That is certainly not the case today. Through your efforts and the work of your fellow officers and directors, membership of Forum 400 has grown rapidly, and the current membership looks a lot different than it used to. What is Forum 400’s mission and what can someone expect to gain from membership?
ELEANOR: Thank you for that question and your confession, Jay. I am very proud to be part of the Forum 400 community! Forum 400 is an invitation-only group of top insurance producers across distribution groups, who are willing to transparently share their best ideas with other members, so that we can all best serve our clients. Because we are made up of members from every major producer group, carrier agency or distribution group, members get a unique clear line of site into what other successful professionals are doing.
The meetings are all for members presented by members, and it is impossible to walk away without getting several ideas that will help you in your practice. Membership has been growing quickly and is increasingly diverse, but we still do limit membership to those who are producing at a significant income level and doing so in an ethical, client-centric way. I would be happy to talk with anyone interested in learning more!
JAY: Having known you for 20 years, I recognized you as a “Seattle institution” and could not imagine you living elsewhere. This has changed with your move to Scottsdale and there are at least two, tiny reasons for that. In addition to embracing your role as a grandmother, how are you spending your time away from your career?
ELEANOR: Yes, I bought a second home in Scottsdale during COVID were my daughter, son-in-law and two grandsons live. The oldest is turning four in February and the youngest just turned two, and I love being only 15 minutes away from them! They are both already frequent fliers, traveling several times each to Seattle, Hawaii, Vail, Florida and of course Disneyland!
JAY: Thank you for being so generous with your time, Eleanor. We have reached our infamous restaurant question. Without naming a steakhouse or a steak dish, what are a few restaurants I need to visit and what should I order when I am there?
ELEANOR: As you know, I go to Lahaina several times each year, since it is where Gary
died peacefully at the end of his FTD journey and we did his special Hawaiian outrigger canoe funeral. This community has experienced so much pain since the Lahaina fires and many of my favorite restaurants are gone, but there are a couple that are not to miss and anxiously welcoming guests!
Mala Ocean Tavern was officially the first “Lahaina restaurant” to reopen. It is on the waterfront, behind the Cannery Mall. The Ahi Bruschetta appetizer is to die for! The other standby favorite of course is Merriman’s in Kapalua. My favorite there is always the macadamia crusted fresh fish of the day. Plan to come before sunset and take a picture with your group!
Since its inception, Life Insurance Strategies Group has solely focused on the individual high net worth life insurance market. We do not sell products. This allows us to offer unbiased, pragmatic advice. Visit us at www.lifeinsurancestrategiesgroup.com.