Volatility in the stock market is a reminder that thoughtfulfinancial advisors can help their clients by preparing them for thepossibility of a correction. Identifying and discussing risks thatcould affect a client's hard-earned nest egg may not be the funpart of an advisor's job, but it's important and much needed.

Property accidents & losses

One such risk — and one that is often overlooked by clients andadvisors — is the risk stemming from accidents and losses involvingproperty. In this area, research conducted by the consulting firmOliver Wyman finds that advisory firm clients want and expect theiradvisor's help in identifying risks and taking steps to helpprotect them from those risks.

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Protection, of course, often involves insurance. Most financialadvisors don't profess to be property and casualty (P&C)insurance experts and quite understandably do not provide advice inthis area. They don't have to.

Advisors can help their clients and at the same time protectassets under management by developing a strong relationship with atrusted independent insurance agent who can be part of yearly assetprotection reviews with clients.

Inadequate or absent coverage

Such reviews are crucial, because while most homeowners haveP&C insurance coverage, for many affluent clients such coverageoften is inadequate or absent entirely. This means that if a clientexperiences an incident where the costs to repair the damage orreplace the loss exceed policy limits, the money beyond whatinsurance coverage provides typically must come from the client'sown pocket.

Consider a family with a homeowners' policy that was purchasedseveral years ago and which never has been updated. Many suchfamilies, and probably many of your clients, have made extensiveand expensive improvements to their home over the years.

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If a catastrophic event were to occur involving their home —say, a pipe bursts and water destroys an expensively renovatedkitchen or ruins the home's new, energy-efficient heating andventilation system — they may discover an enormous gap between thereimbursement they receive from their insurance policy and thetotal expense of repairing the damage.

Unexpected disruption

If your clients find themselves in a similar situation, they mayhave to dig into their investment accounts to bridge thecoverage/expense gap. That could mean not only unexpecteddisruption of your carefully drawn financial and investment plans,but also big changes in your clients' lives as they face workinglonger to rebuild their retirement nest egg, for example, or havingto change their estate or philanthropic plans.

All these potential negative outcomes could be easily avoided ifyour clients periodically update their P&C coverage. Byintroducing your clients to a trusted insurance expert who can helpthem select a more comprehensive policy, you are pointing them inthe right direction to help manage their P&C risks. And yourclients want you to be involved in this process.

In the Oliver Wyman study, 77% of those surveyed — all affluentclients of financial advisors — said they would appreciate theiradvisor providing access to P&C guidance and counsel. More thana third (37%) said they even would be willing to switch to anadvisor who made such advice available.

P&C insurance counseling can be be profitable &appreciated

In addition, if P&C advice were part of the mix a financialadvisor provided, almost half those clients surveyed said theywould be more satisfied. In addition, more than a quarter said theywould increase the amount of money they invest with their advisor,41% would stay with the advisor longer and half said they would bemore likely to recommend their advisor.

In short, including P&C insurance counseling through aqualified insurance expert could be a profitable and very muchappreciated service addition to your business.

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Fran O'Brien is division president, North AmericaPersonal Risk Services for Chubb. She can be reachedat [email protected].