Press Room

If a person can be reborn in the business world, Chin has been. More than 20 years ago, the Securities and Exchange Commission forced him to halt the sale of notes to obtain capital for his fledgling insurance company. Over the past six years, he has made up for lost time, building a hold-in-the-wall insurance office into one of the more impressive financial organizations on the West Coast. “A lot of people think I’m a cocky S.O. B.,” he says. “Well I am. My company is not in competition with any other. We are the competition.”

Today, AIS—the name once stood for Associated Insurance Services, but is now simply the corporate name—employs 40 people and expects sales to reach $10 million this year. The secrets of this success are not hard to find. First, Chin is aware of his strengths and, perhaps equally important, his weaknesses. Although the company’s activities include three other basic enterprises—capital planning, which includes real estate and joint venture business opportunities, financial planning and business consulting---some 80% of Chin’s business is still insurance-related. He sees his own role chiefly as an administrator and promoter, and his company as a solution to client financial problems that crop up during the complex insurance analyses that his company specializes in. “I’m not a financial planner,” he admits. “But I have hired some very good people. I would stack them up against anyone.”

Staffing is the second secret to AIS’ success. While other companies curb growth when conducting formal nationwide job searches, Chin’s entire office serves as a local recruiting network. “People bring in people and each new person is interviewed by everyone else,” says Chin. “The staff has grown from within.” Roughly three-fifths of the company’s personnel have come from the Asian-American side of the Bay Area community, and as a group they are not lacking in credentials. Executive vice President Oliver Stafford holds the CFP designation, as do staff financial planners Pamela Lee, Rena Chin (no relation to Edward) and Joanne Kusudo. Vice Presidents Clifford Der and Dennis Hong specialize in benefits and real estate analysis, respectively. This group is assisted by three CPAs and Cary Fong, an MBA-degree holder who serves as the company’s chief tax consultant.

Staff associates often work in pairs to support the financial planners in the drafting of plans. “We engage in networking among ourselves,” says Stafford. “There’s a lot of brainpower and energy under one roof.” One result has been the launch of a deferred-giving concept that works directly through local charitable organizations. Chin sells a program to the charity, receives a list of potential contributors and sets up donations of wealthy contributors to serve as premiums on their life insurance policies. The charity becomes the owner, payor and beneficiary of the policy and begins to receive cash distributions before the donor dies. For the donor, there is a tax deduction, for AIS, there are introductions to wealthy philanthropists in the Bay Area, some of which will lead to new business.

Another staff-generated tool could have more far-reaching consequences. An in-house team made up of Senior Systems Analyst Curtis Wong, Stafford, Lee and Rena Chin has fashioned a software package out of custom-designed programming and financial analysis programs purchased on the outside. The result is a computer-produced financial plan which includes bar graphs and colored pie charts to lay out the investment, insurance, tax, retirement, estate and business planning posture and needs of each client. This, according to Lee, has marketing benefits as well; customers are invariably surprised by the inflation rate projections and by a calculation that shows how many “lost dollars” could have been put into productive investments. The cash flow analysis and action plan alone often run between 10 and 30 pages, depending on the complexity of the customer’s finances. There are internal uses as well; from the data base, any of the planners can segregate data by investment, client characteristics, tax bracket and other features.

Stafford says the company was anxious to avoid the boilerplate approach because of the potential loss of customized service and flexibility. “It’s just as personalized as the old way of doing things,” he says. “It just speeds up the process.” Chin agrees, noting that the continuous process of updating due to technical advances and changes in tax laws can be done at a central location. “You can do two plans a week the old way,” he says. “This way, our planners can do two a day.”

In the past 18 months, AIS has taken 200 clients through the entire profile and another 300 through one or more phases of it. Marketing has gone through the trial-and-error stage; the initial price was a flat $600 ($450 for attendees of the seminars), but the profit margin proved to be too thin. Currently, the company charges $100 an hour and the entire process – gathering data, feeding it into the computer, producing the binder and initiating the action plan—takes 8 to 10 hours. Of the $800 to $1,000, AIS requires a $600 deposit (which can be charged on Visa or MasterCard). If the client remains with AIS, annual updates run $225.

The other secret to the company’s success is shrewd and successful marketing programs. To date, its files include 1,000 corporate and business clients and another 3,500 life and disability customers whose incomes range from $18,000 to $3 million. Many AIS clients have attended the seminars that Chin puts on for employees of large corporations and credit unions in the Bay Area, including IBM, Bechtel and FMC. Their median net worth tends to be a bit downscale of the country’s better-known practices: between $250,000 to $300,000.

A smaller but growing side of the business is support for independent representatives in the Bay Area. “They can use part of our computer system or our investment expertise and still remain independent,” says Stafford. The outside planner is billed at the same $100 an hour rate and then builds that into what is charged to the client. To date, some 300 outside insurance agents either sell products through AIS plans or sell the overall planning concept to their clients.

Finally, AIS has managed to keep the more obvious conflicts of interest from influencing how the company interacts with its customers—something Chin admits is not always easy. The staff of professionals is paid on a formula basis; rather than collect commissions, they receive a compensation based on past production. Although Chin is in the process of creating his own broker-dealer, with Lee and Rena Chin as registered principals, he has no plans to manufacture his own investment products. He has turned down a number of such deals because, in his view, AIS’ people cannot be objective if they push what is in the company’s own inventory.

This philosophy, and the commitment to building a financial services company one step at a time, has made AIS into one of the area’s leaders in the financial services marketplace. Recently, the company moved its offices out of 3,200 square feet of Spartan quarters to a 7,000-square-foot space in the 26-story Kaiser Center, overlooking Lake Merritt in the city’s financial district—a place where Chin believes he now belongs.

Cliff Pletschet is an Oakland, California-based investment columnist.