Hunter Ewing With High Ground Company

Intro: [00:00:04] Broadcasting live from the Business RadioX Studios in Atlanta, Georgia. It’s time for Atlanta Business Radio. Brought to you by on pay. Atlanta’s New standard in payroll. Now, here’s your host.

Lee Kantor: [00:00:24] Lee Kantor here another episode of Atlanta Business Radio, and this is going to be a good one. But before we get started, it’s important to recognize our sponsor, Onpay. Without them, we couldn’t be sharing these important stories. Today on Atlanta Business Radio, we have Hunter Ewing with High Ground Company. Welcome, Hunter.

Hunter Ewing: [00:00:43] Thank you, Lee. It’s great to be here.

Lee Kantor: [00:00:44] Well, it’s great reconnecting with you. For the folks who don’t know, can you tell us a little bit about high ground, how you serving folks?

Hunter Ewing: [00:00:52] Well, thanks, Lee. We are an insurance advisory firm. Lee We have a particular niche in using life insurance products to help folks, in many cases with tax planning, with business planning, sometimes philanthropic planning. So these are more sort of tactical strategic uses of life insurance planning, many times driven off of those things, as well as just the tax benefits of life insurance. So we look a lot like a consulting firm, I guess, is what I would say.

Lee Kantor: [00:01:23] So can you share some maybe some misconceptions about life insurance that folks aren’t aware of?

Hunter Ewing: [00:01:30] Well, that’s a I appreciate the question. That’s a that’s a great question. I think I think one of the biggest misconceptions about life insurance is that it is a cost. And let me differentiate that. I think of life insurance as an asset. And the reason I think of it that way is because like anything that you put money into and you know something is going to come out of it in the future, you can sort of say, All right, what’s the investment return or the internal rate of return on doing that? And that looks a lot like an asset. So if I put money into a real estate, whatever, something’s going to happen in the future where there’s going to be a return and that’s an asset. So I think a big misconception is just that it’s a cost or an expense. When I think of it more as an asset.

Lee Kantor: [00:02:14] Is it because by using having the word insurance as part of the name, that people look at it that way, that this is, you know, in case everything goes bad, something will be there. Hopefully they don’t they don’t kind of look at it as an investment.

Hunter Ewing: [00:02:29] Yeah, I think that’s absolutely right. Lee, I think also in all candor, you know, our our industry has not done itself any favors in some ways in the sense that, you know, many people have purchased life insurance products that have not been adequately serviced over time and they haven’t provided the the the outcome that was originally intended. You know, that’s an issue. I think also candidly, I think just kind of the nature of the beast, it’s difficult sometimes for folks to discuss and think about their own mortality. That can be an issue. But, you know, I think one thing I would just say is if you sort of strip away the word and the name life insurance and you sort of look at it on an economic basis, you look at it and go, man, that’s a very efficient financial product. And the right set of circumstances can really can really be helpful for whatever someone is trying to accomplish. Doesn’t fit every need, but it certainly can be very useful in the right situation.

Lee Kantor: [00:03:24] But if you’re planning, you know, if you’re working with a financial advisor or a wealth consultant, it should be part of the conversation, right? This isn’t something that you just immediately just take off the table.

Hunter Ewing: [00:03:37] I would think so. And candidly, that’s really a lot of our business is referred to us from other financial advisors, many of them in the wealth management asset management world. Lots of our business comes from attorneys that specialize in tax planning CPAs. But yeah, absolutely. You know, we see we see some of the wealth management firms really appreciate the role of life insurance in a client’s overall financial planning.

Lee Kantor: [00:04:08] Now, can you share like a hypothetical example of where this is like a no brainer that people should be at least considering it? Like, what is a scenario where this would be kind of a kind of no brainer move?

Hunter Ewing: [00:04:24] That is a great, great question. I’ll try to keep it short and sweet. I think two things come to mind, Lee. If you and I own a business together and it’s a very valuable business and something happens to me, my ownership in the business is going to go to Lisa, my wife. You got to have the means to cash to be able to buy Lisa’s interest out after I’m gone. So in this example, what a life insurance policy will do for each of us is it would give you the cash tax free that you would then use to buy life. Lisa’s interest in the business. And so from a business succession, what’s called buy, sell planning, I think life insurance is a no brainer. The other the other thing that comes to mind is if I’m a very, very high net worth family or individual and I have am subject to a potential estate tax in the future on transitioning my wealth to the next generation In my family, I can purchase a life insurance policy. Essentially what I’m doing in that case, Lee, is I’m buying cash in the future at a big discount. So just to pick a number, if I’ve got to if I face a $10 million tax bill in the future or my family does, I can buy $10 million of tax free capital by way of a life insurance policy for a lot less than $10 million. And so to me, that’s a no brainer.

Lee Kantor: [00:05:59] So now you’re talking about high net worth, folks. Is this something that like what’s a number that of net worth that you should consider at least having conversations about this? If somebody has $100,000, is net worth, is this something worth having a conversation on or is it, like you said, it’s got to be 10 million and above?

Hunter Ewing: [00:06:20] Well, there’s certainly let me let me answer the question this way. There are certainly great uses of life insurance, regardless of what someone’s someone’s wealth is. It happens that our our business is more focused on the high net worth market space, but but you know, for example, I don’t consider myself mega high net worth at all. And we’ve used my wife and I are using life insurance as a way to create some capital for our three kids and grandkids at some point in time by way of kind of a legacy creation strategy. So when we go, there’s a certain amount of money that’s going to go into a trust and sort of create some inheritance for our children and grandchildren someday. So, you know, I think it the the rules apply. Again, I would say to simplify it, if someone says I want to create some capital when I go for some reason, I want to create some cash tax free when I go for whatever the reason is, I think insurance is at least should be considered and taking a close look at.

Lee Kantor: [00:07:27] So now you mentioned that a lot of your work is done through referrals from people, I guess, who aren’t specialized in this niche as as you are. How do you kind of bubble up those opportunities for these folks? Is it just a hole in their offering that they don’t do this and they’re looking for an export, or is it something that you’ve established yourself as kind of a thought leader in this space?

Hunter Ewing: [00:07:52] Uh, wish I could call myself a thought leader. That’s. But the answer is that it’s taken. It takes a lot of time to develop trusted relationships with other advisors. There’s lots that goes into that, like personal chemistry, trust, confidence. But we’ve spent a lot of time over the years developing relationships that are trusted. These folks that we and it goes the other direction, too. We have a client, for example, who who maybe says, you know, gosh, I’m I would really like to have a new accounting advisor, a CPA that could be, you know, provide X, Y or Z. You know, we we have a great network of folks that we could refer based upon whatever they’re trying to accomplish. And it goes the same way. So we have spent a lot of time over the years developing relationships. We spend a lot of time regularly keeping our close relationships, educated on opportunities for insurance planning so that when there working with a client and the client says something that may trigger a thought where the advisor might say, you know, maybe that’s something we need to consider, let’s call high ground and at least do some analysis and figure out if it’s a good fit. Is there a problem that you have that the client has that maybe insurance can can help solve? So that’s our approach.

Lee Kantor: [00:09:17] Now, you mentioned one of the uses of insurance or life insurance is through this kind of succession planning for businesses. Is this something that I mean, you mentioned early, early that individuals don’t like to talk about their own mortality, but in business people, it’s probably even worse because they have their own mortality plus the mortality of their organization. So is that kind of even more difficult to even open these conversations with business owners?

Hunter Ewing: [00:09:47] Yeah, I think I think I don’t know if it’s more difficult, but it’s equally difficult. Um, and, you know, look, my partner, Beau Wilkins, and I own high ground company. Um, we’re, you know, just like all business owners. Busy, busy, busy every day with, you know, running and growing your business. And sometimes it’s just hard to sort of pull back and say, whoa, I need to take some time to really sort of think about this particular issue. And you sort of look at it and go, well, maybe it’s not, you know, going to create revenue today. It’s it’s a longer term sort of thought process. And I think that’s the thing that makes it difficult is just the fact that business, you know, business owners are busy people. They’ve got a lot of things that are happening every day, fires that pop up. And so, you know, allocating the time and energy and to think about these kind of things is just it’s just not easy.

Lee Kantor: [00:10:46] So what would it look like if you have like you and your partner, what does that conversation look like and how do you begin to even calculate what is the appropriate policy that the partners should have?

Hunter Ewing: [00:11:03] Well, that’s a great question. Let’s think about it this way. In a situation where perhaps maybe an attorney has introduced us to his or her client and they’ve already discussed the importance of sort of business succession planning, then the issue is already on the table. And the the prospective client, the business owner is, you know, sort of of a mindset that they want to sort of focus on it and discuss it, you know, in a situation like that. Lee We would we would have a meeting with the client and those advisors to really so that we could understand firsthand what their concerns are and what what they were trying to accomplish. On the other hand, if it’s sort of a more traditional sort of organic situation where maybe we just meet someone and and that previous conversation has not happened, you know, we would we would take the approach again of from really the ground up to learn about them, learn about their family, learn about their business, learn about what’s important to them, what are their concerns, and go about it in a more traditional manner. Did that answer your question?

Lee Kantor: [00:12:13] I’m just trying to get I’m trying to look at it through the lens of a listener that has a business and they have a partner and maybe they’re getting older. It’s like you said, they were busy. This didn’t even occur to them that the tax ramifications and the logistics of, okay, what am I going to do? One of us, you know, you know, is not here anymore. You know, now I’ve got to deal with their spouse. I got like it’s all these unintended consequences that occur, you know, once that domino falls. So so like, say they wrangle their partner and they say, okay, Hunter, what what do we do? Like, do I get an appraisal for the company so I know the value, Like, how am I going to logistically, you know, get this policy so that I can take this worry off my plate?

Hunter Ewing: [00:13:01] Yeah, that’s a great that’s a great question. So I think that’s right. I mean, we would certainly in that kind of case, we need to we need to assign an accurate value for it. So we work with accounting firms and valuation firms that would do that, that very that very thing. I will tell you that at least sometimes we’re involved in a project right now and these two fellows own a very successful business. And as simple as it sounds, we said to them, Look, hey, Bob, what is the you know, if you were going to sell to to Jeff today, what is the minimum value you would take for that? And they sort of sat back and, you know, sort of looked at each other and laughed and made a couple of jokes. But they finally came back and said, you know what? In all seriousness, if I were out of here, if I were just going to sell it and retire today, I would take no less than blank. And and so we talked about that more and really sort of drilled down on that. But at the end of the day, that’s the amount of protection that we’re we’re working off of.

Lee Kantor: [00:13:58] So it doesn’t really the a third party appraiser that’s nice to have. But the bottom bottom line is this is a negotiation between two partners, right? So the the value is in the eye of the beholder from that standpoint.

Hunter Ewing: [00:14:15] Yeah, that’s right. I think that’s exactly right. Um. But no doubt about it. Yeah, they and the other thing I would add to that is, you know, we certainly see situations I would we have clients that will ensure some of the risk that they have in some cases, not all of it. We certainly have clients that will ensure all of that value, but in some situations they also have other strategies that they incorporate with insurance, such as an installment type arrangement. Maybe. Lee you and I again own a business and it’s worth a lot of money. We might fund 50% of that potential buyout cost with insurance. And then we might say, okay, the rest is is sort of paid out over time or a lot of times we’ll get a question about, okay, well, my business is worth X today, but certainly we hope it’s going to be worth more in the future. What you know, what insurance value should we work off of? And we can certainly say, all right, you know, let’s let’s insure the value today. We can even buy forward a little bit and increase the value based upon anticipated growth. But in a lot of cases, Lee, they might say, all right, the value is X today and anything over that amount, we’re going to, you know, handle by way of some kind of installment payout or loan arrangement, something like that. So, you know, it’s all the above.

Lee Kantor: [00:15:33] Now, if somebody’s like, say, they say, okay, our business is worth $1 million and I want to get $1 million of life insurance in case one one of us goes, What is the like, how much is $1 million worth of life insurance or is there a flat amount of money? Or is that thing depend on several variables.

Hunter Ewing: [00:15:54] Another great question. So it will depend upon the person’s age and their health and the type of product that they purchase. So there are different types of insurance products. Oftentimes people will use term life insurance, which is a great product for a short term need. Sometimes they’ll use a permanent life insurance product for kind of an indefinite need. So one of the really important things we try to understand and is where are they on that? Are they do they intend to maybe sell the business in the in the short term or in the future? We would in that case, we probably would recommend they buy term life insurance. On the other hand, like the fellas that I mentioned earlier, they’re saying, you know, this is this is no, we’re going to be here for the long haul and we want this protection to never go away. Well, in that case, we’re recommending permanent insurance. So all the things that you’re asking will be driven off of their age, their health, and the amount of insurance and obviously the type of insurance.

Lee Kantor: [00:16:54] So what would be kind of a range for $1 million like for a term and for permanent?

Hunter Ewing: [00:17:00] You know, I would say for term insurance, my sense would be call it 1000 or $1500 for every million, assuming someone is I’m 58 years old, $1 million of term insurance for someone in good health is probably $1,500 for every million dollars. And that would last about 20 years. Obviously, it’s kind of a good estimate if it’s a permanent insurance policy. The outlay might be 7 to 8 times that amount, but it’ll never go away. So that’s kind of the distinction. You’re buying a longer period of coverage and that just takes a higher amortized outlay.

Lee Kantor: [00:17:45] And that’s an annual fee. You’re paying that every year to maintain the insurance.

Hunter Ewing: [00:17:50] That’s right. And then they can be really, really customized. So today’s products are so much better than they used to be and they allow us to design the the policy so that, again, I’m going to pick on you and me. You know, we might say, look, you know, boy, we’re really doing well right now and we expect our business to be really, really strong for the next five years. We want to we want to knock this thing out and fund it over the next five years. And we don’t want to have to pay for it after that. You know, we could sort of design the the contributions to the policy to really to to pay it off or pay pay pay it up in five years. And so they’re very, very customizable this day in time.

Lee Kantor: [00:18:36] And that’s why you kind of need an expert. Right. This isn’t something if you were trying to Google this and try to figure it out on your own, you know you’re going to miss some stuff. You got to work with folks that are doing this every day.

Hunter Ewing: [00:18:49] Um, thank you. Yeah, I agree with that. You know, it sounds self-serving, but there’s a lot to it. And, um, it makes me think about. Here’s an analogy. You know, you can buy a a will or a trust or some sort of legal document off legal zoom, but you sort of get what you pay for and you really ought to have a good attorney. I know it’s sometimes it’s expensive, but those folks are invaluable and a good accountant, they are invaluable and a good wealth management person. You know, instead of trying to do it yourself, they’re going to be invaluable. So, you know, we think of ourselves, I guess, in that same same vein, right?

Lee Kantor: [00:19:29] It’s one of those things you don’t know what you don’t know. And these people are kind of going over this every day. They’re paying attention to the trends and the little nuances of this stuff that you might miss because you have a real job. You know, you have another job that’s not this and this is their job.

Hunter Ewing: [00:19:46] Yeah. And the one thing that comes to mind is you said that is it’s so important to have a good team. And I think that’s one of the things that we enjoy about our work is we get to work with other advisors and really put our heads together with them and, you know, figure out the right approach for the client together, get the attorney’s perspective, get the accountant’s perspective, get everybody’s thoughts on the table. 99 times out of 100, that creates the best, best outcome.

Lee Kantor: [00:20:15] Now, are there is this an industry that changes a lot or are there new things coming, new offerings coming like every day and you got to be on top of this? Or is it something that, you know, this thing is what it’s been?

Hunter Ewing: [00:20:27] Yeah, man, that is a you’ve got some great questions today. It changes all the time. And there there are a handful of things that change. The products change a lot. One of the things that was really, um, was really helpful, I think, about COVID was the fact that it really forced insurance companies. Insurance companies, for probably a good reason, have gotten a bad rap on their on their technology and on their implementation systems and what have you. And man, COVID really, really forced them to get in the game from a technology standpoint. And so a good example would be, you know, when someone buys insurance historically, they have to go. They have to have an examiner come see them and get a blood sample and urine sample and this stuff to to, you know, prove they’re in good health. Today’s world, that still happens in some cases, but more and more frequently now, technology is coming into play where some of that underwriting can be done without those kinds of things. So and we know the companies that do that and we know the companies that are easy to work with and and that changes all the time. Um, products change. It’s a very, very competitive market. Insurance companies are always trying to out develop each other on the product development side. Um, they’re constantly coming out with new products or tweaks to existing products. And yeah, a big part of our job is to stay on top of all that stuff and know what’s happening in the market so we can bring the best potential solution to our clients.

Lee Kantor: [00:22:02] Well, if somebody wants to learn more, have a more substantive conversation with you or somebody on the team, what’s the website? What’s the best way to get ahold of you?

Hunter Ewing: [00:22:09] It is W-w-w dot High Ground company.com W-w-w dot high ground company.com. And we are here in Atlanta right over by Powers Ferry in 285. But our business is all over the country and we would be happy to help take a phone call or arrange an appointment to learn more, see what we could see if we could help.

Lee Kantor: [00:22:34] Well, Hunter, thank you so much for sharing your story today. You’re doing such important work and we appreciate you.

Hunter Ewing: [00:22:40] Thank you. Lee. It’s been it’s been fun. I’ve really enjoyed it.

Lee Kantor: [00:22:42] All right. This is Lee Kantor. We’ll see you next time on Atlanta Business Radio.