The secondary market expands the range of financial planning solutions an advisor can offer. For this reason, the advisor’s first responsibility is to have their client’s life insurance holdings appraised on a regular basis. With an accurate valuation, advisors can determine if a secondary market transaction could be advantageous.
If a secondary market transaction is in order, advisors must next see that certain due diligence requirements are met. They should ensure that the purchasing firm has policies and procedures in place to protect client confidentiality, including provisions that no identifying information about the insured will be provided by the purchasing firm to an individual investor. Most important, they should make sure that institutional capital is used to fund the transaction. Only through such due diligence can the opportunities of the market truly be realized.