Swiss Life on Capturing Untapped HNW Sales Opportunities in Asia

The Hubbis Asian Wealth Solutions event took place in Singapore on June 8, during which Christopher Tanchou and Claire Tan, both Business Development Directors of Swiss Life Global Solutions, offered delegates an interesting presentation on how wealth management advisors can help create awareness of life insurance solutions to add extra value to their relationships. They explained how these RMs and advisors can help by discussing real-life scenarios on how insurance solutions meet evolving clients’ needs and can help guide those clients towards working with the experts that will curate and deliver the best solutions. They focused their attention largely on Variable Universal Life and its particular advantages.

Claire Tan opened the presentation by explaining that Swiss Life is one of the largest companies in Europe, with a history of over 165 years and in 2021 produced net profits of CHF1.2 billion from some 17000 advisors and had more than CHF102 billion of client assets under management. Moreover, the company is very robust financially, with a well-performing share price over the past decade plus, and a credit rating of A+ stable from S&P.

“Chris and I come from the Swiss Life Singapore entity, which focuses solely on creating life insurance solutions tailored to high-net-worth individuals,” Claire reported. “We have three flagship solutions. The first is VUL called Alpha Plus. Then we have our PPLI, which is called Life Asset Portfolio or LAP in short. And last but not least, we have our hybrid solution, which is basically a life insurance policy with a flexible coverage. Each of these solutions are for clients with different needs and concerns.”

Christopher then explained that client needs continually evolve and regulation constantly changes, always becoming more intensive. He particularly highlighted the tightening around CFC and CRS, both of which developments have further encouraged private clients to take out new life structures for transparency and protection.

He addressed the main concerns amongst clients, including the vital reporting obligations, so often linked to tax and income. “Reporting can be actually a nightmare for some clients, for example Indonesia has a worldwide taxation system so imagine those clients having to report line by line across assets and accounts worldwide,” he said.

Cross border compliance is another major concern. “Mobility is very important, and we see that many clients are actually moving from one country to another, with a lot in this region relocating to Singapore, for example,” he observed.

“You don't want your clients to set up a structure or to buy a policy or solution which is not sustainable, may not be efficient, or even well organised for the future,” he cautioned delegates. “You want something that can last actually for the next 20, 30, 40 years.”

Succession planning is another key concern and objective, he noted, explaining how effective life solutions can be in effecting smooth transitioning of wealth and control amongst the generations.

And simplicity is a major appeal, he reported. “Clients are not looking for anything complex anymore, they are not looking at several layered structures these days,” he explained. “They want something which is actually straightforward, easy to understand, but also easy to explain.”

Claire then mined down into the advantages of VUL. She said VUL is a well-recognised life insurance policy across every jurisdiction around the world, regardless of whether the jurisdiction is based on common or civil laws.

VUL provides robust asset protection from creditors and helps with succession and efficient wealth transfer. Clients can maintain control over investment strategies, they can defer taxation until distribution to provide efficient portfolio growth, and the structure offers simplified reporting, especially in the brave new world of CRS.

Christopher then focused on how the wealth industry incumbents can help their clients by bringing VUL to the conversations. “Engaging your clients with these types of ideas is essential,” he said.

Claire explained: “We like to position VUL with clients as a multipurpose vehicle that not only offers wealth accumulation benefits but also wealth protection benefits in the form of high death coverage, and not forgetting, there's also the benefit of wealth distribution, because the policy allows the client to nominate beneficiaries in a private confidential manner, as mentioned earlier, and therefore bypassing probate.”

Christopher added that he likes to present VUL as a safety hedge against market volatility and asset price rises and falls. “Without VUL, a client owning a USD20 million portfolio today, if the client passes away, the estate value will simply actually follow the market trend, and either be up or down based on market prices. So, the estate is completely affected and impacted by the markets. But with a well-designed VUL structure acquired with Swiss Life, for example, the client is always more covered and more protected. The beneficiaries will always end up getting more, regardless of the market trends. So, you can use these ideas to engage your clients.”

He added that it is also possible to connect to clients via alignment with ESG-centric objectives they might have. “You can nicely combine insurance with ESG mandates, to give wealth to the next generations in an ESG compliant manner,” he explained. “That makes a nice story.”

Another advantage is, for example, using low LTV assets that are not truly optimised. “Those types of lowly geared assets are often just sitting idle, so they could instead be used as assets by Swiss Life to offer substantial coverage,” he explained. Claire added that such assets might often include founder shares of their businesses that if unleveraged or with very low LTVs could be plugged into a VUL structure to obtain high death benefit for the next generations. “This will also help ensure that the founder shares are transferred seamlessly and smoothly to the next generations because probate is bypassed,” she noted.

She also referred to work they had conducted for banks to wrap clients’ Discretionary Portfolio Mandates within a VUL. “This idea is gaining so much traction recently because the benefits are multi-fold,” she said, “not just for the client, but also for the banks. The clients can use the DPM to fund the premium of the policy, and the bank retains the existing AUM, and even become ‘stickier’ as the client is then less inclined to transfer the assets out to another bank.”

Moreover, they added that the wealth accumulation is still provided, but the clients also obtain the two additional pieces – easy wealth distribution with the nomination of beneficiaries, and also wealth protection, thanks to cover given by Swiss Life.

They closed the presentation by reiterating the value of engaging clients in these discussions and reminded delegates of the close relationships Swiss Life has long enjoyed with major financial intermediaries across the globe.