One of the greatest economic inventions is risk pooling and this sits at the core of any insurance company. Because of risk pooling, we have much more financial security at lower cost in our property, health, and lives.

Unfortunately, the life insurance industry often designs products that have valuable benefits but come with features that get in the way of an advisor’s enthusiastic adoption of these products for his or her clients. This has been the case with variable universal life insurance or VUL.

Insurance Like It Should Be; Benefits without Barriers is an advisor-focused educational platform that elevates VUL insurance products that deliver VUL’s great benefits, the column on the left, while removing the barriers that keep advisors from using VUL as a core planning tool; this is the column on the right.

The emphasis here is on “advisor-applied” because Double A VUL truly keeps you, the advisor, in your central planning and investment execution role, and with it you gain a flexible investment platform for your business that increases your high-income clients’ after-tax returns. This delivers an attractive ROI for you and your clients.

Let’s take a look at how wealth preservation reveals itself with your clients. Your clients worry about losing wealth in the market. This has been true historically, but the pain of the Great Recession still takes an emotional toll on your clients. The UBS study referenced here is quite remarkable in that so many years after the crisis, the fear of a similar loss is still felt so strongly by 68% of your top clients.

And, your clients worry about all of this, about an hour and a half a week or 475 hours a year.

Since you get this anxious feedback, it’s not surprising that the top concern of 76% of advisors like you relates to the investing process: the portfolio structure . . . interest rates . . . volatility . . . and yield.

For both you and your clients, a lot of time and anxiety is focused on expecting the stock market to decline.

Remember, NOT losing dollars has important economic benefits through the power of compounding, and you can’t create wealth unless you preserve it first. A dollar is a dollar. In other words, a dollar lost to a market decline has the same impact of a dollar lost to overspending, investment product fees, or unprotected property losses.

Anxiety about market declines in many ways is misplaced. Bear markets are much shorter than bull markets. And, when a bear market does occur, there are both governmental and monetary tactics that can be deployed to shorten its length and minimize its impact. Keep in mind, too, that a portfolio only loses actual wealth when market losses are realized through sales. With an advisor watching over a client’s portfolios, it’s uncommon that these clients would divest in a panic. The normal course is the paper losses turn back into gains as the market turns positive.

Our focus here is on the degrading impact taxes have on wealth, because taxes occur every year. The top 1% of earners make $450,000 and at this level the marginal federal rate is almost 40%. If you include the Medicare surtax, the top marginal rate is over 43%.

For clients in high-tax states, a marginal rate over 50% is a fact of life. Portfolio taxes, whether from portfolio income or realizing gains, is considered marginal income since it is not earned. This means that the blended federal and state income tax is claimed first against earned income, which is closely monitored by the IRS.

So, you have a dilemma. Your clients are anxious about market volatility so you structure the portfolio to keep it resilient in the face of a market decline. However, many of the investments used to moderate volatility, investments such as fixed income, alternative investments, REITs, and dividends from non-US stocks , are subject to income tax rates each and every year.

Nor can you lose sight of the negative impact that capital gains taxes have on your clients’ wealth creation. Although the top federal capital gains tax rate is 20%, all states also charge taxes on capital gains. The average capital gains tax rate for all states is over 28% with California residents paying 33% and nine states with the lowest at 25%.

But, here’s the tax impact kicker. Rates of return on stocks of all types historically are much higher than fixed income. So, while the tax rates may be lower than marginal income tax rates and gains are realized only every few years, the reinvestment of the tax savings is higher. For this reason, you will often see the benefits of tax alpha highest for equity investments.