When a client passes away or experiences a crisis, many advisors face an immediate uphill battle: Trying to retain a spouse or child when they never forged a close relationship with them in the first place. The encouraging news is that today, more than ever, advisors have an opening to build those bonds.
A small, silver lining from a global pandemic is that individuals and families are thinking more about their own health, and whether they have a plan in order that isn’t a burden for the family if something happens to them.
By pulling those thoughts from the recesses of one’s mind to a productive, actionable plan for the entire family, advisors have an opportunity to understand the family better and play a pivotal role in pulling them through a potential time of crisis.
While the opportunity is on the table, it won’t be easy. No one wants to dwell on uncomfortable “what ifs.”
Advisors need a better bridge
When it comes to retaining a family member as a client, the numbers can seem daunting. A joint study between InvestmentNews Research and Equitable found that only a quarter of surveyed advisors are highly confident they will assist their clients’ children in managing family wealth. The lack of confidence comes despite the fact that two-thirds of advisors say the frequency of communication with their clients’ children has increased over the span of their career.
The research also points to disparity in the rate at which advisors engage with both spouses during the financial planning process. Nearly four in 10 surveyed advisors communicate exclusively or primarily with just one spouse.
By not including the other spouse or children in a relationship, advisors may be setting themselves up to lose the relationship if the main client they communicate with has health issues or passes away.
Advisors can build a bridge to those family members by getting them together to discuss the tough — but absolutely necessary — issues that must be addressed to create a fully-baked, comprehensive life plan. The first challenge is getting everyone to the table.
The tough part: taking charge of emotionally charged issues
Real, comprehensive life planning is about much more than finances. It involves emotionally charged conversations around items such as living wills, health directives, or when someone is ready go to an assisted living facility. Advisors are in a unique position to act as a neutral, third party helping clients jump-start these conversations.
Advisors can also keep those discussions from becoming a freefall conversation that leads nowhere. By providing a guidebook or written list of items the advisor wants to accomplish in the planning process, he or she can show clients what they will get from the conversation, and open the family up to having thoughtful and productive dialogue. The toughest part is just getting them on that pathway.
Ed Broglie, senior regional vice president at Equitable, has coached advisors on having these difficult conversations. He suggests two ways to get them started. First, advisors can ask clients to rate on a 1-10 scale how prepared their family would be if something happened to them and the client could no longer take care of day-to-day finances.
After receiving that rating, Mr. Broglie suggests the advisor list some of the items the family would need to know — everything from phone app passwords, access to life insurance policies and annuity contracts, account numbers for various rewards programs and the designation of a power of attorney for medical decisions. Once the advisor goes through the list, it helps to ask the client to re-rate their preparedness, Broglie suggests.
He adds that personal stories about how families were affected when the tough conversations never happened can also be a motivator. For Broglie, an example strikes close to home. His close friend had a father suffering from Alzheimer’s. When the son moved his dad from Boston to New York, he closed his dad’s bank accounts back home. In doing so, a $500,000 life insurance policy that had been on autopay for years lapsed, and the father’s children missed out on a sizeable inheritance.
“By telling those specific stories and pitfalls that we’ve all seen in estate planning … it gets people to think more emotionally, and emotion drives behavior,” Broglie said.
Crossing the finish line
To get clients to talk, flesh out and make the tough decisions, it helps to have a guidebook that walks them through everything. Equitable offers clients a comprehensive guidebook, the Share Your Love Family Discussion GuideSM, dividing these topics into seven main sections covering:
- Key contacts and professionals, which includes not just people, but important website and phone app passwords;
- personal assets, which includes property listings, retirement accounts and other investments;
- the client’s financial obligations;
- insurance and/or government and VA benefits;
- other important documents, such as wills, trusts, power of attorney documents and tax returns;
- a section on loved ones who need care; and finally,
- details about funeral arrangements.
The last section is most important and ties values and emotions to the planning process. The guidebook dedicates three pages, asking clients to reflect on the traditions they want the family to continue, the values they want to pass on to their family most, personal items they want individuals to inherit, and other emotional aspects that make the planning process much more than an informal list of assets and wealth.
Filling a guidebook with all of life’s details is an important, and in some ways cathartic process. But it’s a long one. Broglie suggested advisors challenge their clients to fill out one page a night, one section a week, or dedicate a portion of each client review meeting to filling the document out together. By divvying the process into sections, getting to the finish line becomes more manageable.
Mr. Broglie suggests doing something small to commemorate when the family has completed its guidebook.
By filling it out, “they’ve done one of most selfless things they can do in life, which is making sure the family has taken care of all their affairs and are able to properly grieve for someone,” he said.
The Share Your Love Family Discussion Guide is available here.
For purposes of this discussion, “advisor” is used as a general term to describe insurance/annuity and investment sales and advisory professionals who may hold varied licensing as insurance agents, registered representatives of broker-dealers, and investment advisory representatives (IAR) of registered investment advisors, respectively. “Advisor” in this context is not intended to necessarily refer to IAR-offered financial advisory/planning services.
This informational and educational article does not offer or constitute financial, legal, tax, or accounting advice. Your unique needs, goals and circumstances require individualized attention of your own professional advisors. Equitable Financial Life Insurance Company and its affiliates do not provide tax, legal, or accounting advice or services.
Equitable is the brand name of the retirement and protection subsidiaries of Equitable Holdings, Inc., including Equitable Financial Life Insurance Company(Equitable Financial) (NY, NY), Equitable Financial Life Insurance Company of America (Equitable America), an AZ stock company with main administrative headquarters in Jersey City, NJ, and Equitable Distributors, LLC. Equitable Advisors is the brand name of Equitable Advisors, LLC (member FINRA, SIPC) (Equitable Financial Advisors in MI and TN).