skills/cim-teardown/references/overlay-financial-services.md

# Overlay: Financial Services

Use for asset management, insurance distribution, specialty finance, servicing, payments, brokerages, or other regulated financial businesses where fee yield, balances, losses, and compliance drive value.

## Table of contents
1. Decision lens
2. Driver tree
3. Mandatory denominators
4. Typical gating items
5. Kill criteria examples
6. Evidence asks
7. Owner mapping
8. External triangulation when thin
9. Red flags

## Decision lens
- Are balances, AUM, policies, accounts, or originations real and durable?
- Is fee yield or spread stable after runoff, repricing, or credit loss normalization?
- Are compliance, servicing, or regulatory risks understated?
- Does cash earnings differ materially from adjusted headline metrics?

## Driver tree
Choose the most relevant base:
- `AUM x fee rate`
- `average balances x net interest spread`
- `policies/accounts x revenue per account`

Then subtract:
- servicing cost
- losses or charge-offs
- compliance and regulatory burden
- customer acquisition or advisor payout burden where relevant

## Mandatory denominators
- AUM, balances, accounts, policies, or serviced units
- fee yield, spread, or revenue per account
- retention/runoff by cohort
- delinquency, defaults, charge-offs, or claims ratios where relevant
- advisor or channel payout rates
- compliance exceptions, audit findings, and licensing status
- cash collections versus booked revenue

## Typical gating items
- Yield assumptions are not durable under runoff, repricing, or credit normalization.
- Revenue quality is weaker than reported because of low-quality balances or one-time items.
- Regulatory, compliance, or licensing issues could impair earnings or growth.
- Servicing or claims burden is understated.

## Kill criteria examples
- `hard pass`: normalized losses, runoff, or spread compression materially impairs earnings.
- `price reset`: recurring compliance or servicing costs reduce the real cash earnings base.
- `pause`: unresolved regulatory or licensing issues create unknown liability.

## Evidence asks
- account, policy, or loan-level export
- fee schedule or spread analysis
- retention/runoff or renewals data
- delinquency, charge-off, claim, or loss reports
- servicing cost reports
- audit, compliance, and licensing materials
- cash collections or remittance support

## Owner mapping
- CFO or finance lead
- servicing or operations lead
- compliance officer
- controller or bookkeeper
- custodian, carrier, or lender counterparties where relevant

## External triangulation when thin
- regulator databases and licensing records
- court or enforcement records
- official rate and market data where spreads depend on external benchmarks

## Red flags
- EBITDA is emphasized when real economics are driven by runoff or credit losses.
- Revenue is shown without account retention or policy persistence.
- Compliance is described as clean without source documents.
- Cash collections lag booked revenue without explanation.