Gabrielle “Ellie” Rubenstein is co-founder and CEO of private equity firm Manna Tree. Manna Tree invests in growth stocks in companies that improve human health through nutrition. Ellie wor

Saftner clay, COO, is a principal of Simpson McCrady, a privately held, independent risk management firm based in Pittsburgh, Pennsylvania, and Washington, DC. For decades, he has specialized in outsourced risk management service for private clients and commercial entities, using a proprietary methodology to identify gaps and holes and seize risk management opportunities to reduce, transfer, avoid or eliminate risks.

Prince: Give me a brief overview of Simpson McCrady and your role there.

Saftner: Colvin McCrady and Bill Simpson formed Simpson McCrady in 1985, focusing on private clients and successful private businesses. Since then, we have expanded our scope to also serve larger entities and even some listed companies. I started with the firm in 1997 and was promoted to partner in 2005.

Most of our wealthy clients have sophisticated risk management needs. They have accumulated wealth through professional practice, business ownership, or family inheritance. We have also developed a cache of multi-family and single-family offices. Complexity is the norm when managing the risks of multiple homes, partial interest in aircraft, yachts, significant jewelry, fine art collections and high-end cars. Sophisticated risk management needs typically require expertise well beyond the capabilities of a typical insurance agent.

Additionally, we act as an outsourced risk manager for private and private equity backed companies, as well as some publicly traded companies. Many of these customers are large enough to have sophisticated risk management needs, but not large enough to have a full-time in-house risk manager.

We thrive as our clients’ outsourced risk management department with a presence in all 50 states and 24 foreign countries.

Prince: What are the most common risk management mistakes you find when looking at existing risk management strategies when meeting affluent families for the first time?

Saftner: The biggest mistake I find is that many successful businesses and wealthy families have neglected or overestimated their current risk management solution. This manifests in several ways. Here are the four most common:

1. The misconception is that insurance is a commodity.

Many successful business owners and affluent families have developed the mistaken belief that there is no difference between product offerings between a direct writer, such as Nationwide, State Farm, or Allstate, and carriers that are configured to meet the needs of private customers and successful private businesses.

The typical culprit for this is inertia. Successful people will come out of college and work for decades to accumulate wealth, but will stay with the same agent they passed down the street. Often they have gone from a starter home to a multi-million dollar home with multiple cars and the trappings of success.

2. Using a broker as an intermediary to a commodity instead of giving them a “seat at the table” with their most important advisors.

Your risk manager should be aware of your tax advisor, your legal advisor, your wealth advisor, your business advisors and even your life and business coaches. Ideally, your risk manager should be part of your cohesive team, implementing integrated solutions on your behalf with all other key professionals serving you.

3. Not leveraging their whole family’s wallet to get the best market deal.

Successful families can derive significant benefit from leveraging their entire family’s portfolio. Unfortunately, many successful families miss out on this important benefit.

4. Shortcomings. Pure gaps in coverage as a consequence of all of the above.

We often don’t see cyber coverage, which is essential these days, especially if you have children, as well as travel, personal coverage, and several other areas where critical coverage is inexpensive and readily available. For example, significant coverage gaps form when you engage in activities such as driving for Uber or Lyft or listing second or third-party homes for rent on AirBnB or VRBO, which often violates standard insurance policies. automobile or owners. We often see this with younger generations and even sometimes with older generations looking to keep busy in retirement.

Prince: Given these mistakes, how would you advise successful closely held business owners and affluent families as they move forward?

Saftner: Generally speaking, the biggest mistakes come down to: (1) underestimating your current risk exposure and, because of this, (2) not choosing the right risk manager, and (3) giving give that risk manager a seat at the table with your other trusted advisors.

Therefore, I would advise them to partner with an experienced private client risk manager to perform a comprehensive risk assessment. This way, they can understand their true risk exposure and develop a plan to reduce, transfer, avoid, or eliminate the risks that expose them to dangerous (and avoidable) gaps and holes.

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