Filed Under:Life Insurance, Life Products

Diamonds: An advisor’s best friend?

(AP Photo/American Museum of Natural History, Denis Finnin)
(AP Photo/American Museum of Natural History, Denis Finnin)

I was rambling around in my office recently, proofing my latest mailer and thinking about what I could do to get more high-net-worth folks out to my seminars (I do 50 per year), when I saw on the boardroom TV monitor that a diamond heist had been perpetrated at an ultra-luxury hotel in Cannes, France.

I dropped what I was doing to hear about how a famous gang, “The Pink Panthers,” overpowered the French security and vanished with approximately $125 million in high-grade diamonds. The setting, the intrigue — it was a welcome diversion, but it also sparked an idea.

After some Googling, I found TheDiamondMarket.com and started talking to Todd Lilleberg, a business development agent at the Florida-based firm. We both agreed that this asset class could increase my firm’s appeal to the HNW investor and also help bring value-added products to my current book of business.

Wait, what? I’m primarily an annuity advisor specializing in qualified income planning, so why would I want to start selling diamonds?

See also: 4 retirement income risks — and how to avoid them

Well, fancy color diamonds have proven themselves to be a top-performing asset class for decades. These rare gems have generally retained their value, even in today’s volatile global economy. In fact, many fancy color diamonds have produced record results, showing remarkable appreciation at recent auctions. For example, a 0.51-carat vivid purplish pink, VS2, round cut diamond sold for $338,500, or more than four times Sotheby’s estimate, during a Feb. 2013 auction of important jewels at Sotheby’s New York.

Fundamentally, fancy color diamonds can provide high-net-worth clients with the perfect potential hedge against unstable paper currencies and depreciating assets. They also offer portability, privacy and flexibility advantages that many other asset classes can’t. Natural color diamonds encapsulate an extraordinary expression of love, a store of wealth, and a tangible symbol of one’s legacy—all in one. It is the singular thing that can draw a gasp or tears from the recipient, provide a measure of security against dubious economic policies, and remains the most permanent asset one can own or give that will fuse their legacy with lasting beauty for multiple generations.

Getting started

After some educational help from Todd, I launched the venture on my long-running radio show, “Retire Right Radio.” The result was stunning to me. I saw an immediate spike in post-seminar appointments, and subsequent seminars have borne fruit via increased numbers and higher net worth individuals in attendance. I engage my audience with a family style discussion that revolves around love, lifestyle, and legacy planning because everybody is looking for secure ways to preserve their wealth and provide a lasting legacy for their family. Long after paper assets have disappeared, the inheritance of a natural color diamond will remain.

But while talking about diamond investments on the radio and at my seminars is great, the real belief system lock-in for the advisor occurs when you take a client through his or her first design-build of an heirloom diamond acquisition.

My first diamond transaction, as an example, amounted to a zero net cost to the client, who extracted a 10 percent free withdrawal from an annuity, on which she had made 12 percent with the carrier. She was not looking to spend this money with a jeweler. She was looking to diversify her savings and preserve her money wisely with the interesting times we find ourselves living in.

When the $30,000 in funds was placed with TheDiamondMarket.com, a stunning necklace arrived at my office via secured FedEx for delivery to my client. I have a salon adjacent to my boardroom, so prior to the client’s arrival, I purchased a jeweler’s form for the necklace. I instructed my assistant to obtain a decorated bottle of Champagne and a greeting card to complete the delivery experience.

When the couple arrived, they looked at the revolving jeweler’s form for a moment and then hugged. The man trembled slightly while placing the diamond necklace that they had designed together around his wife’s neck.

To say this was the most poignant delivery I had made as an advisor would be an understatement. These clients have seven figures of assets with my firm, but the diamond experience topped off our relationship like none other.

My vision now, as an early adopter of this asset class, is to share my journey with other advisors. I would encourage producers in the IMO/FMO platform to get the diamond story out to their clients.

Christmas, birthdays and Valentine’s Day are obvious sales opportunities. But there’s also a year-round opportunity to talk to clients about investing in a hard asset with an impressive history of appreciation. It’s an opportunity to invest in heirloom storage of some of their wealth in a very volatile and uncertain world.

 

For more on alternative investments, see:

Asset managers are staffing up to support alternatives

RIAs yearn for alternative investments

Alternatives to hit 14% of mutual fund assets

More Resources

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