The Unending Journey
How Expanded Worldwide Planning (EWP)
and its various entities came into being
From Museum Administrator to Insurance Broker
From Malloy Insurance Services to EWP Financial
– Michael Malloy’s professional path
When you begin an adventure you don’t always know how far it will take you. After attending university I was working as an administrator for a museum, coordinating the exhibitions and supervising the staff. One day our insurance broker, Bob, came for his annual tour and inspection of the museum.
As we were concluding our day and he was getting into his car, I said, “Bob, do you think I could work for you?” Bob paused and took on a reflective look, and said, “Yes, I think that might work out.” This was the birth of Malloy Insurance Services.
What I enjoyed most about my museum job involved insurance, both in the risk management aspects of the collection, and working with the proper insurance valuations of the art works. But on the whole, I found my job too staid and predictable, and I was looking for something more in line with the adventuresome spirit of a 20 something young man who needed a new challenge.
After a few years of running a successful branch office for this San Francisco Bay Area insurance agency, I felt like I was back at the museum. How did this feeling of being too comfortable with a predictable routine change? Like many things in our lives, it began with a phone call.
Life Insurance in the Forest
One of our agency’s property and casualty insurance companies said that I needed to sell life insurance as part of my contract with them. I ignored them for a period of time, but their insistence was wearing thin. I was told emphatically that unless I sold a few policies, I would be culled from their ranks.
Who did I find as my first prospect for life insurance? A chain sawyer who would be helicoptered into a dense forest to saw down huge trees, alongside other chain sawyers who were doing the same. The trees would then be helicoptered out of the forest. Since he had no life insurance and six children and a wife to support, he had a definite need for life insurance, but would a company take someone with such a high risk job?
To my great surprise, I found out that this particular life insurance company did not underwrite for the insured’s occupation. He was in good health, qualified for life insurance in all other respects, so the policy was issued and I was off on a new adventure—offering life insurance to my clients.
The Mountain Biking CLU
I soon found out that life insurance also involved financial planning. My clients began asking me about handling their investments which involved obtaining a securities license. Since I was progressing into the more sophisticated uses of life insurance in estate planning, I needed more knowledge. I turned to the American College of Financial Services, who offers the coveted and difficult to obtain, Chartered Life Underwriter (CLU) designation.
How was I to find the time to pass the eight detailed and challenging exams necessary to obtain the CLU designation? Enter a new activity in my life, mountain bike racing. Yes, strangely enough these two activities became inextricably linked.
Since I obtained a university athletic scholarship for middle distance running, the mile and three mile events, endurance events were not foreign to me. I continued to keep fit after my university career, so the transition to mountain bike racing was not too difficult. The main points I learned were: most races were won on the uphill sections, and going downhill was more like skiing than riding a bike. Where does studying for the difficult CLU exams fit in?
Many of the races were miles from my home, and usually involved an overnight stay at either a campsite or motel. I would usually go a day early, hence a day to hit the books, and learn about the interpolated terminal reserve of a life insurance policy, and other such arcane topics that dissected life insurance policies and other financial planning tools into their most minute parts. Thankfully, I passed my exams and became a decent mountain bike racer on the amateur circuit to boot.
Gaining the CLU designation gave me the confidence to begin writing a newsletter, The Life Insurance Law Newsletter, where I discussed topics related to life insurance law as it pertained to planning for wealthy families. The Newsletter was published for several years, and slowly morphed into financial planning concerns beyond issues solely related to U.S. clients.
Wikipedia Solidifies The Six Principles
I began including topics in the Newsletter that pertained to clients of the other 194 countries in the world. To my astonishment, I found that financial planners in the U.S. were mostly ignorant of the financial planning opportunities that existed for international families, and the sophisticated techniques that could be employed on their behalf.
This study and research opened many new financial planning possibilities, and led me to obtain the Trust and Estate Practitioner (TEP) designation. This designation is awarded by the Society of Trust and Estate Tax Practitioners (STEP). According to Wikipedia, the TEP designation is “the only widely recognized mark for professionals in the trust and estate administration industry.”
The acquisition of international families as clients led to the opening of our British Virgin Islands (BVI) office, and the founding of Advanced Financial Solutions, Inc. to support these new activities of our firm. Over the ensuing years we formed successful affiliations with our six Regional Representatives, which gave us worldwide expertise in working with wealthy families around the world.
To reach our new worldwide audience of wealthy families, we needed a new presence on the world wide web, so Michael Malloy Solutions was employed to bring our financial planning ideas to the entire globe. Michael Malloy Solutions gives a clear, unified voice for all our entities to educate wealthy families and professional advisors on how to enhance privacy, and gain the maximum amount of asset protection and tax efficiency, and at the same time stay compliant with tax authorities worldwide.
Our expanded presence on the internet and increased educational role brought me to the Registered Financial Counselor (RFC) designation, which is awarded by the International Association of Registered Financial Consultants (IARFC). Founded in 1984, the IARFC’s mission is to recognize world class financial consultants and empower them to make a transformational difference in the financial lives of the families and communities they serve.
Wikipedia recognized our knowledge-based solutions for financial planning for wealthy families by including the concept of Expanded Worldwide Planning (EWP) in their article on International Tax Planning. On this Wikipedia page, the six principles of EWP are defined. EWP is defined as “an element of international taxation created to implement directives from several tax authorities following the 2008 worldwide recession.”
The six principles of EWP are: privacy, asset protection, tax shield, succession planning, compliance simplifier, and trust substitute.
The Wikipedia article goes on to say, “EWP allows a tax paying entity to simplify its existing structures and minimize reporting obligations under the Foreign Account Tax Compliance Act (FATCA) and CRS. At the heart of EWP is a properly constructed Private placement life insurance (PPLI) policy that allows taxpayers to use the regulatory framework of life insurance to structure assets along the client’s planning needs. These international assets can also comply with tax authorities worldwide.
Why I Published Two Books
Our firm regularly receives requests from those seeking more knowledge about the type of planning that we do, and sometimes they ask for books. Previous to 2019, the one substantial book on PPLI, The PPLI Solution, is woefully out of date, as it was published in 2005. It also focuses on traditional PPLI structures, mostly those used to enhance the tax efficiency of portfolio investments only. The book does not discuss the more sophisticated uses of PPLI that are accomplished by employing the six principles of EWP.
In 2019, I published two books, The PPLI Papers: Secure Wealth and Tax Compliance Through Private Placement Life Insurance and The Wit and Wisdom of Professor PPLI. Both books are a collection of articles previously published on our educational website, Michael Malloy Solutions, downloadable on PDF format.
These two books introduce to wealthy families and advisors, asset structures that are only possible using the six principles of EWP. These asset structures are the result of diligent and exacting research into every aspect of international life insurance and the tax laws pertaining to the wealthiest families in the world.
The Academic Counsel That Outshines Them All
Luck, of course, is an indispensable ingredient in success, but to stay at the head of the pack, one needs staying power. In the field of creating successful asset structures for the world’s wealthiest families, having a Distinguished Professor of Law as academic counsel to our firm gives us the intellectual firepower to be the leader in our field.
Who occupies this role for us, none other than Professor Craig Hampton, the author of the legendary Hampton Freeze, who has come out of retirement to be our intellectual guiding light. Guiding Light? No, a spectacular burst of flame.
Professor Hampton has successfully structured hundreds of billions of dollars into asset structures, using the six principles of EWP long before we discovered them. Professor Hampton’s asset structures not only gained him extremely satisfied clients, but also achieved full compliance with tax authorities world wide. We are very thankful indeed to have him on our team!
Let Professor Hampton tell the story of the birth of the Hampton Freeze in his own words. This account dates from the early 1990s.
“I was visiting a gentleman at his home in the Piccadilly district of London. It was explained to me that his net worth exceeded US$100 million by a substantial margin. I noticed the presence of a computer terminal on a large desk in his den. It was surrounded by reams of paper dealing with offshore investing.
It soon became apparent that his affluence was due to how own efforts when he said to me: “You’re a bright young man who obviously knows his craft. But what can you tell me that I don’t already know about finances?”
I leaned forward and made this simple statement:
“Through the creative use of international life insurance, your financial affairs can be arranged so that you will never have to pay income taxes for the rest of your life!” The gentleman took serious notice, and thus was born The Hampton Freeze.”
EWP Financial: The Pinnacle
This brings us to the creation of our last and concluding entity, EWP Financial. Many firms establish a parent company to oversee its many operations. We have now reached the stage to do the same with the birth of EWP Financial. This new entity will represent both Advanced Financial Solutions, Inc. and Malloy Insurance Services, all found on the world wide web as Michael Malloy Solutions.
Of course, our adventure has not ended. Endings can be new beginnings, as our narrative has proven. EWP Financial and its component entities are ready to serve wealthy families wherever they might reside. We offer the most advanced financial planning tools available to assist them in making the six principles of EWP the building blocks of their asset structure.
As our track record has proven, the asset structures that we build continue on their journey for multiple generations, bringing wealthy families financial security and peace of mind.
by Michael Malloy, CLU TEP RFC, @ Advanced Financial Solutions, Inc
