This month, Jay talks to Kris Stegall, President, Momentum Advanced Planning. The pair chat about Kris's path to the life insurance and estate planning industries, the "global citizen," how to attract more young people to life insurance and food recommendations for two cities.
JAY: I get excited when I see people younger than I am becoming successful in the life insurance industry. Not that I’m young myself anymore but, as you know, Kris, our industry is aging. Over the past decade, I have watched you grow from someone who absorbed every bit of technical information they could to a leader who shares their knowledge with others. We are going to talk about your path from an Applied Mathematics major to life insurance guru but, first, tell me about Momentum Advanced Planning and your role with the organization.
KRIS: Thanks for this opportunity, Jay. Momentum Advanced Planning is a team of resources, curated by a single-family office to help manage their family’s wealth, that now serves and collaborates with other families and family offices. At Momentum, we are fortunate to be in the unique position of using the lens of a family; yet, work independently with other families and family offices. We can provide a host of expertise and services around tax planning, asset protection, family office structure, wealth transfer, and risk management – always putting the needs of a family first. We take a solutions-based approach to our work. As President, I manage the day to day at Momentum and get involved in all aspects of our platform. That said, my experience and expertise centers around life insurance and estate planning for affluent families and family offices.
JAY: You live north of Philadelphia but you’re most recently from Texas. Fill me in on your upbringing, education and your path to the life insurance industry which, as I understand it, wasn’t your original career.
KRIS: Well, I was actually born in California. My parents were both in the Navy, so the first two years of my life were spent in San Diego before my mom talked my dad into moving to East Texas to be closer to her family. I went to middle and high school in Palestine, Texas where we lived far outside of the city. We had goats, chickens, and pigs and I used to literally chase snakes out of the henhouse before school in the morning.
When I was not scheming a way to get my brother and sister to do something silly, and hopefully not get hurt in the process, I played soccer and video and computer games and programmed a little. When I graduated high school, to be honest, I had no idea what I wanted to do and much less how to get there. But I did know that rural East Texas wasn’t going to work for me, so I packed up and moved to Austin in 1996.
After staying with my aunt and uncle for a month or two, I found my first job sweeping popcorn at a mall movie theater courtesy of my cousin who sold tickets there. Maybe not the most glamorous job but made lifelong friends there, including my beautiful wife, Kimberly! From the movie theater, I was recruited to work at the arcade downstairs from the theater, a move that truly shook up the mall community.
I figured life in the entertainment world probably wasn’t the best long-term for me, so I left and took a job at a call center answering the phones for, well, Microsoft Xbox! It was also around this time I started taking education a bit more seriously and started my college journey through Austin Community College.
Believe it or not, the call center was great. After answering calls for a year or so, the supervisors figured out I wasn’t great at staying on script – a surprise to no one - but had an aptitude for operations, probably stemming from my days managing frustrated parents and sneaky kids from the theater and arcade. I started modeling call flow to staff agents at 30-minute intervals to help minimize down time of the call center agents, thus maximizing potential profits for the call center.
I ended up managing the operations team, taking the reporting and expectations of the call center up a notch. It was a bit unnerving trying to forecast how many calls to expect over Christmas for accounts like Xbox, but we managed it well – taking the number of agents from, say, 100 to 2,000 worldwide in the matter of a few weeks. I experienced my first taste of working internationally here too, going to the Philippines to help set up and train their operations team. As with all jobs, it takes the right folks to push and motivate you to do more and think differently. I certainly had that there working for folks like Ben Chacko, Chris Furner, and Julie Jones.
Then there was this one individual who worked for me one summer that ended up changing my professional trajectory - Adnan Raja. He was working a second job at the call center to help fund a trip for he and his mom to go to Mecca. One day he just called me out of the blue, and said, “Hey… I’m at NFP and we need someone who’s good in Excel. Do you want to interview?” By this time, I had wrapped up my degree from Texas State University and felt it was a good time to move on. So yeah, sure, why not?
As for my time at NFP, well, I really feel like I got lucky. I knew nothing about life insurance and even less about estate planning. Still not sure why they hired me, to be honest. I was pretty good at Excel and that was it. Fortunately for me, the team was incredibly talented and, probably most importantly, very patient with me.
I could never thank these folks enough. Leilani Van Auken would be there to check my work with her HP12-C. Bryan Schick pushed my creativity. Janet Deskins proved that actuaries do actually have fun. Karen Joyner and David Lear encouraged innovation and, later, started LifeTrends.
Other lasting relationships I formed at NFP include Celeste Moya, Amanda Zukowski at WinTrust, Mr. Omnipresent Bobby Samuelson, Mike James, Peter Chung, Cindy Davis, Jane Hall, James Joyce, Tiffany Hyde, Kristin Bulat, Caitlin Hoffman, Jacqueline Steinberg, Julie Schneider, Keith Miller, and so many others before naming folks like you Jay! I’ll never forget that day you came to Austin to give us an education in offshore, high-net-worth life insurance. It is remarkable who I have worked with and for over the years. If I am considered an expert, it is thanks to them. Hopefully, I’m being a good custodian of their patience and making a difference to others in the industry!
JAY: It isn’t often I get to interview someone who knows so much about advanced applications of life insurance. Our country is about to see a number of significant tax increases as well as a loss of a few planning techniques like, possibly, the step-up in basis at death. What advice do you have for affluent individuals and families about how life insurance can help mitigate these changes?
KRIS: The nice thing about life insurance is that, at the end of the day, the death benefit is dollar for dollar. There are no income taxes due on a death benefit and, if owned in trust, can be unaffected by estate taxes. This provides the distinct advantage of a built-in step up in basis that injects pure cash into the estate planning equation. If you need cash to offset an estate tax liability, it is there. If you need cash to help offset capital gains taxes due to Biden’s proposed deemed disposition, it is there.
Want to make sure that assets do not have to be liquidated to pay taxes, life insurance is there. Want cash and for the family to not worry about finances for a while, life insurance is there. That is not to say life insurance is the answer to everything, but it’s tax-advantaged nature can play a significant role in estate preservation and cash management regardless of whether estate tax rates and exemptions are high or low or whether or not step-up in basis is eliminated. The usefulness and simplicity of cash in a complex moment, in and of itself, should garner the want of life insurance as part of one’s estate plan.
JAY: You are an expert in foreign national and U.S.-nexus life insurance matters. More so than most producers who might occasionally run into a one-off situation or concentrate on individuals from a specific country like Israel or Mexico. We have batted around dozens of client scenarios over the years, and it is evident there has been an evolution of what is known as the ‘global citizen’ – someone who lives, works, and has family and property in several jurisdictions. How do you approach finding the appropriate life insurance solution for these global citizens?
KRIS: We really have talked about some interesting scenarios over the years. It does seem like there are more folks moving or having family members, properties, and businesses outside of the country of their citizenship than ever before. For these global citizens and families, the needs of life insurance remain the same – just maybe more complicated depending on the jurisdictions involved.
Availability and flexibility tend to be the drivers behind what solution makes the most sense. It may make a lot of sense for people with lots of nexus to the United States to use products based in the United States. They are priced well and have an obvious need for insurance domiciled here, covering estate taxes or creating liquidity for heirs.
Those with limited or no ties to the United States, however, may want to look elsewhere for insurance solutions so they do not have to follow US ownership guidelines or, more importantly, US definitions of life insurance. These clients may be less worried about estate and inheritance taxes and more interested in potentially tax-advantaged savings, more death benefit capacity than they can get locally, and flexibility with offshore trusts versus their local or U.S. counterparts.
That is a long way of saying each circumstance is different. Understanding where the clients are domiciled, where they plan to be domiciled in the future, where their heirs are, where their companies are, and the issues they are trying to solve all play a role in the appropriateness of a life insurance selection and ownership structures for that matter.
JAY: I’m going to continue to pick your brain by getting your sense of where our industry is headed. Throughout your entire career, there has been a declining interest rate environment, followed by a sustained low interest rate period. What does this mean for the future of the life insurance industry and the types of solutions which will be offered to clients?
KRIS: First, it is wild to think that the interest rates have done nothing but fall since 1981. This is a great question and I think there are many other components to the future of life insurance solutions beyond low interest rates. But, if I stick to that sole variable, I think you will see a few things. First dividends from whole life insurers will lag for some time as interest rates rise. Then, the existing general account portfolios continue to add new money at these low rates, and, at some point, those older monies will expire.
Like whole life, traditional universal life will have similar pressures on the general account. For IUL products, I believe there will be continued downward pressure on caps and participation rates as, historically speaking, volatility remains high as interest rates raise – meaning options pricing on IUL products will continue to rise.
Where UL and IUL will have an advantage over their whole life counterparts, and what I fear, is that instead of lowering rates across the board at a steady pace the insurers will simply release new products at new market rates to illustrate better at the expense of their older books. I hope agents and families with these policies are prepared to manage them.
I also think we will see a continued push towards indexed products, albeit with proprietary volatility-controlled indexes to help offset the options pricing, and other products that continue to shift risk back to the insured. In addition to managing these portfolios, agents and brokers should be adequately stress testing the products at the time of sale and throughout the life of the policy.
Of course, there are some good things too! I think the sensitivity around interest rates have also pointed insurers to look at cost savings measures which, really, means spending a lot more on technology to drive direct consumer engagement, minimizing acquisition costs by automating or at least streamlining underwriting, and continuing to look at hybrid type contracts that include disability or long-term care attributes. I am not sure this will offset the impact of the interest rate having been persistently low, but it will not hurt. Maybe this technology forward approach will appeal more to post-Baby Boomers and be a means for the insurers to gain markets while decreasing the cost for carriers to do business.
JAY: As you have gotten older, you have probably noticed there aren’t a large number of younger people coming into the industry. Last year, I spoke with your former NFP colleague, Celeste Moya, a principal at C3 Partners, about how we might go about attracting new talent and she suggested senior producers should get more involved in fostering the growth of new producers and not just rely upon the traditional agency sales training programs for a foundation. This includes teaching about the technical side of our industry. You fit his description and I would hazard to guess your success comes from being able to tie economic concepts to life insurance and then being able to clearly explain complex solutions. Where do you think we can find more people like you and how can we keep them in the industry?
KRIS: Constantly changing estate planning techniques paired with incredibly different product options that you have to focus on and marry together in a cohesive, understandable and executable plan can make for a very interesting and collaborative day in the office. I love the math side related to tax, structure, and the economics of a transaction. And I love the artistic side of finding ways to clearly identify what I’m seeing and why I’m proposing X, Y, and/or Z. I think if new people entering our industry could witness this convergence of math, art, and law in what we do, more would be interested in pursuing it. As for where I think we can find them? I think they are studying math, computer science, art, communication and/or law. And, unsurprisingly, I agree with Celeste. Senior producers who are willing to share their experiences, approach, and knowledge by involving new producers will make all the difference to attracting and retaining younger people.
JAY: Alright, no more life insurance questions. Let’s hear about your family because you’ve been having a good time being a dad, even if COVID-19 had you establish a unique work-from-home structure. What is your life like outside of work?
KRIS: Less travel and working from home, to be honest, has been great! The time gained and enjoyed with my wife, Kimberly, and our two little girls, I mean, it’s just awesome. We go hiking, hit farmers markets and playgrounds, read stories about unicorns - or alicorns, as is the favorite of my oldest! Seeing the little big brains in action and sweetness of the two just brings, how do I describe it, incredible warmth – just pure joy and love!
Hoping soon that my wife and I will be able to get back to regular date nights, though we do well making time for each other at home… it’s just different getting out. Beyond date night, Kimberly and I also hit a few milestones in the thick of COVID and having a second child, so we are due a big celebratory trip. And I do miss playing soccer -this will be back on the table here soon, too, as well as a backpacking adventure with the Luckless Hiking Club.
JAY: This has been a lot of fun, Kris! You’ve made it to the restaurant question, and I know you’ve been anticipating it. As we all start to travel more, what are some of the non-steakhouse restaurants and non-steak dishes you are dying to get back when you hit the road?
KRIS: Oh the places we’ll go! Kimberly and I are due a pretty big vacation and, I’m sure, our short list will include New Orleans. Really looking forward to some oysters and a litany of cajun and creole dishes – but there are a few spots we’ll definitely end up hitting:
Mandina’s for a Shrimp PoBoy
Desire Oyster Bar for Breakfast
Drago’s Metaire for Oysters
Galatoire's for Crab Yvonne
Coops Place for Jamabalaya…and maybe a little attitude!
Muriel’s for Bread Pudding - get it to go and sit in the grass at Jackson Square.
And to be fair to the city, anywhere else I walk into randomly. Everything is so delicious!
As wonderful as Pennsylvania has been wonderful to us, but I seriously miss the barbecue, tacos, Tex-Mex, and dive eats in Austin, Texas!
Black’s Barbecue for Brisket first, then everything else - in Austin or Lockhart.
A burger, which I admit is a form of steak, at either Casino el Camino (Amarillo Burger) or Salt & Time where you have to ask to have nduja added.
Torchy’s for Queso and Tacos
Dim Sum at New Fortune
And don’t forget to grab a drink at Lala’s Little Nugget and a beer at Austin Beer Works
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.