A Commitment to Putting Clients’ Needs Ahead of Ours
The Ross Companies business is life insurance. However, this is only a starting point in understanding the elaborate and intricate way that we become involved in the lives and business of our clients.
To begin with, no two clients are the same. One idea that has proven true in our nine decades in business is that two very similar cases will diverge because each case involves different people. While insurance is our business, creating relationships with people is more the product and value we create.
This is why our process is so deep, detailed, and personal. There is no getting around the concept that creating unique solutions to complex problems always must take into account the human factor. This is an area where our president, Norman Ross, has excelled during his decades in the business.
Our exclusive clientele of wealthy and affluent individuals and families come to us with a variety of problems with various levels of complexity. They don’t always find us organically, and many are referred by a professional like an attorney or law firm, an accountant, or a financial advisor. In each case, they come to The Ross Companies because we have a detail-oriented manner of analyzing a problem and creating solutions.
This sounds very nebulous, so we will delve into some details by creating a few fictitious cases.
The Ross Companies is one of the oldest and most well respected professional life insurance planning firms in continuous operation.
CASE ONE: The Classic Family Feud
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unresolvable. The father was very wealthy, both children were spoiled by the wealth, and neither seemed capable of supporting themselves independently. In fact, their major activity seemed to be sniping at each other.
This is a sad circumstance. The father really wanted to do right by his children, but his generosity had proved problematic. Not everyone can see an outcome like this, and both parents did not want to see their children destitute, so disinheriting them was not an option.
The mother was rightly concerned that if she left her children each a large sum of money all at once, they would go through it quickly and become destitute. Whatever she left either child would need to be carefully managed, and she needed a trustee to ensure things would be handled in accordance with her wishes.
She turned to The Ross Companies. We agreed to serve as her trustee and helped her to create trusts with rules that would honor her wishes and enable her children to go on living the kind of life each had built. Her values would be baked into the operation of the trust, and we would manage and distribute funds in accordance with her wishes. The outcome left our client happy. The children…well, not every aspect of every story has a happy ending, but they will never be destitute.
CASE TWO: The Business Succession Dilemma
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grew this into a business worth tens of millions of dollars. As he grew older, he began planning his estate. He wanted to be fair to all three of his adult children, but only one followed him into the business; the other two had gone into other ventures and were doing well for themselves.
His estate attorney referred him to us. We sat down and began having a very interesting conversation. His heart was in the right place, but his two children outside the business would only have an interest in the cash that could be produced from its sale. His son who followed him into the business was deeply invested in continuing the enterprise and planned to eventually bring his young children into the business.
How could the patriarch be fair in the way he intended? We realized that the best way to handle this was to create a trust that would hold a life insurance policy on the life of the patriarch. When his time came, the trust would collect the proceeds and distribute them to his two children who were not involved in the business, ostensibly buying out their shares. Because our client was both alive and actively involved in a business that could see its value change, we agreed to revisit this policy every other year to update its value if necessary.
Our solution satisfied our client’s sense of fairness, his children who weren’t involved in the business were satisfied with cash proceeds, and the son involved in the business was gratified that he wouldn’t need to eventually secure large loans to buy out his siblings.
CASE THREE: The Favored Step-Child
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of how carefully we considered the feelings of everyone involved.
In this case, the client, the patriarch of this affluent family, had a child during his relatively brief first marriage. He initially had intermittent contact due to interference by his ex-wife, who remarried shortly after their marriage dissolved and wanted her new husband to be considered the child’s father. As time went on, contact with his first child became holiday and birthday cards, and then estrangement. Concurrently, he had two very happy events in his life: first, his business grew tremendously, and he became quite wealthy; second, he married again. His second wife, a widow, brought her child into his world, they became close, and he became the only father this child would ever know.
The client is not a flashy guy, so the first wife and child do not know the extent of his wealth. He feels emotionally more attached to his step-child. While there are ways of drawing lines and creating percentages, our client wanted more fluid control over the distribution of assets that would eventually occur. One of his big concerns was that his first wife would pressure their child to contest the will if the amounts inherited by both children were not equal, and although he was estranged, he frowned on the idea of a no-contest clause. (We’ll leave it to the lawyers to debate the legality of those clauses.)
Our solution was an insurance funded trust that was dedicated to the first child. This would provide a substantial inheritance and would enable our client to remove his first child from his estate plan without actually disinheriting him. The payment would come from a trust, and the trustee would assess the child’s situation to ensure that the child was not a criminal or had other qualities that our client would find objectionable. And the world of our client’s daily life that included a child who was his logical if not biological heir would be represented as the only child in the estate.
These cases are merely simplified, high perspective examples of situations that can be encountered by The Ross Companies. While these take only a moment to read, the reality of these situations is that it takes a very long time for us to work with clients to determine the extent of the problem and arrive at a solution before we work with their legal and financial team to build the structure that will later execute their wishes. One of the components will likely be insurance, which we would expect to broker.
While we are on the subject of insurance, there is something that we would like to note. Norman Ross is an expert when it comes to analyzing and assessing coverage. It’s a service that he insists our company undertakes in order to discover whether our client is properly insured. Here’s where there can be an issue: Insurance may have been bought a decade ago to insure an asset that was worth $16 million at that time. The policy, when it was issued by another insurer, would have been properly priced at that time. In the intervening years, the asset may have appreciated substantially, so today that asset would be worth $38 million. (For transparency’s sake, we used stock market indexes over a 10-year period for those dollar figures.) That 10-year-old policy is no longer sufficient to cover an estate tax liability, and with potential changes on the horizon regarding the estate tax, this policy may need to be updated this year, and again in two years.
Many insurers who work with the wealthy and affluent clientele we serve aren’t really willing to invest the time in determining whether you should add a policy or roll coverage into a new policy. Because of the commission focus that is often a driver in our business, a broker may suggest you get rid of the old policy and as your new broker will rewrite the entire universe of coverage. This may benefit them while not necessarily benefiting you as a client. This is not the way we operate. Our guiding principle is that we function in a fiduciary capacity on both a professional and personal level, always putting our clients’ needs ahead of our own.
Our Expansion To Austin, TX
Since The Ross Companies was founded as Hirshfeld, Stern & Company in the 1930s, and through all phases of our evolution, we have been a New York-based company. Our client base stretches from coast-to-coast, but our New York roots were firm. And then, there was a new opportunity, and reasons that compelled us to open a second office in Austin, Texas.
Where New York is a world melting pot, Austin is something of an American melting pot. One of its nicknames, Silicon Hills, pays homage to the many technology companies that now have their primary headquarters, secondary headquarters, or significant operations in the city. In the time we have been in Bat City (another of Austin’s wonderful nicknames), we have met many fellow transplants from New York, Los Angeles, Boston, the San Francisco Bay Area, and many other coastal cities who now call Austin home. Many of them work for tech companies like Dell, AMD, Amazon, Apple, Google, Meta (aka Facebook), IBM, Microsoft, Oracle, Tesla, Qualcomm, or SpaceX. A good number of the companies in the NASDAQ 100 have a presence in Austin.
For all our newfound enthusiasm about Austin, we are a New York company run by a native New Yorker. We realized that this gives us a few special advantages.
Many smaller cities have a provincial nature that is hard for natives to escape. Because of our national experience, our outsider perspective, and our inherent New York toughness, we bring a perspective and guarded approach that protects the privacy of our local clients from the local community. This can be tremendously advantageous.
Our Austin address comes with distinct New York roots, and we would never distance the company from its big city heritage. Having one foot in New York Harbor and another in Lady Bird Lake feels just right for The Ross Companies at this stage.
We take a great deal of pride in the work we have done and the relationships we have forged and maintained during our nine decades in business. We have a deep belief in our methodology, our meticulousness, and our thoughtfulness, and we know our clients find value in this approach.
We hope we can be of service to you, your family, and your legacy.
