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Helping clients ensure their estate planning is done properly should now be considered an integral part of your financial advice offering. In the past, it has been common for some financial advisers to mention in an SOA that their client should have an estate plan in place. When the client asks for guidance as to who they should approach to create their Will an all-too-common response has been to send them to the local solicitor. This process may have worked years ago when tax, super and relationships were all a little simpler, but today and in the future, it’s essential that advisers integrate estate planning into their broader financial advice offering.
Sadly, if your client’s estate plan is poorly drafted, any issues may not become apparent until after they die and it is realised that your client’s super, tax and insurance have not been dealt with effectively. In such a scenario, this may lead to protracted legal challenges, perhaps even involving you. More concerningly, it will reflect poorly on you as the financial planner and make it much less likely that the beneficiaries of your client’s estate will decide to use your services.
It is vital that, if you do not have estate planning expertise, you recommend to your client that they use an experienced estate planning lawyer to help with their estate planning. This may cost more initially than the local solicitor but it will be drafted to ensure that any potential ways it could be challenged are considered and, as far as is practicable, are protected against. Similarly, the complexities of passing on super and insurance to the client’s desired beneficiaries in a tax-effective manner are also considered. The complexities of blended families or when the special care of a particular beneficiary owing to their physical or mental illness needs to be facilitated can also be factored into the Will.
As an adviser, you already have a trusted relationship with your client so you are in a good position to discuss their estate planning wishes. You will already be discussing with your client how to manage and build their wealth so this presents an excellent opportunity to have a broader discussion around how they should protect their wealth and ensure it goes to the loved ones they intend. Handing over the estate planning to someone else means you are removing yourself from a discussion that will likely deepen your relationship with your client. Instead, by choosing to add value for your client in the estate planning sphere you will stand-out from other financial advisers who do not.
So rather than outsourcing, where you can, attempt to partner with an estate planning lawyer so you can maintain control over the relationship with your client. Try to make it easy for the estate planning expert to understand your clients’ wishes and for them to be aware of any matters that are unusual. You should also try to ensure your client’s estate plan stipulates that you will continue to manage their investments. At this stage, you should try to find out as much as possible about the beneficiaries of your client because this may give you an opportunity to build a relationship with them and increases the likelihood of securing them as new clients in the future.
A 2014 study* from the US found that advisers continue to manage about 50 per cent of their client’s assets when they die – and that makes sense as often the surviving partner will already have a relationship with you. What was interesting was the fact that when the surviving partner also died, the adviser only retained about two per cent of those assets. This shows the importance of building a relationship with not only your client’s partner, but also their next of kin as it will be the next generation that secures the long-term prosperity of your business.
The increasing intertwining of estate planning and financial advice is only going to accelerate in the future so start thinking now about how you can integrate estate planning into your financial advice offering.
For more information, speak to Ravi Malhotra, Head of Business Development, Australian Executor Trustees by calling 02 9028 1093.