How Should Advisors Talk to Clients About Legacy Planning?

When it comes to financial planning, talking to clients about getting older and their mortality can be sensitive. However, the reality is that planning should generally extend beyond clients’ lifetimes while allowing clients to create their preferred legacy.

Financial advisors play a critical role in guiding investors through the complexities of choosing beneficiaries, estate planning, executing wills and trusts, and other key elements of their final affairs. While some clients may be reluctant to talk about these topics, a forward-thinking approach empowers individuals to make educated decisions about their financial legacies.

The ultimate goal is to provide peace of mind to your clients and their loved ones by ensuring their financial affairs are in order, minimizing tax burdens, protecting their assets, and preserving wealth for future generations.

Unfortunately, not many people are prepared.

Back to the Basics

A 2021 Gallup poll found that only 46% of U.S. adults have a will that describes how they would like their money and estate to be handled after their death. And, although the 2020 U.S. Census Bureau reported that about six out of 10 Americans have a retirement account, only one in three have an estate plan according to Caring.com’s 2023 Wills and Estate Planning Study.

As a Financial Advisor, how can you best help your clients develop legacy plans?

Financial Advisor Peter Leppones, CFP®, with Apella Wealth, always starts with the basics. “Are your beneficiaries updated? Is your will updated? If it’s been five years, have you gone back to make revisions? What’s changed in your life?” he asks his clients. “Rules and laws are constantly changing; staying on top of those is more than half the battle,” he adds.

Financial Advisors must stress the importance of updating documents. Conversely, it’s your job as the Advisor to keep up with those rules and regulations. A client may have filled something out years ago that becomes out of date because of laws changing within their state.

It’s ultimately up to the client’s attorney to determine what needs to be updated on their will or trust. Working with an advisor who can collaborate with the client’s attorney provides the client with a sense of comfort about making any necessary updates.

Planning and Taking Action

When it comes to creating a legacy plan with your clients, planning ahead is critical.

Peter shares a recent client situation:

“My client didn’t have his beneficiaries filled out before he passed away. His brother was going through his estate and saw emails I had sent and forms sitting on his desk that hadn’t been filled out. Even with all my prodding, my client didn’t do it,” he explains.

“Ultimately, the money will go where it's supposed to go—to my client’s brother—but it’s going to be a little messy in the process. And it’s difficult on the brother because he’s grieving and now has to deal with this,” Peter says.

In many cases, Financial Advisors need to do some hand-holding, encouraging clients to take action.

JT Lavery, Associate Director of Sales at Symmetry Partners, relates his own family situation:

“My mother is in her mid-70s. Every now and then, she’ll let me know she’s thinking about redoing her will or thinking about redoing her beneficiary payouts,” he shares. “I keep telling her, the important thing is that she actually does it. Because she can talk about everything she wants, but if something were to happen I can't really say, ‘This is what she wanted,’ whether I know that or not. It has to be in writing.”

He adds, “It’s not an easy conversation, but I have to remind her that anything can happen at any time, and you need to make sure your affairs are in order. That way, you can be assured that when you do pass on, your wishes are being fulfilled.”

Begin With the End

Stacie Nemetz, CFP®, AIF®, with Apella Wealth, advises her clients to begin with the end in mind, focusing on their ultimate goal.

“Sometimes people don’t know right away. And it changes over time. But by updating your beneficiaries and your legal documents, you’re carrying out your goals and your wishes,” she says.” It’s making sure you can be intentional with the resources and assets you’ve worked so hard to accumulate.

Admittedly, these aren’t easy conversations to have with your clients. But they’re necessary.

Addressing long-term healthcare is another integral discussion—especially considering the annual costs of places such as senior care or memory care facilities. Higher-end facilities can cost $250,000 a year, which can quickly erode your client’s legacy. Typically, people don’t begin to consider these costs until a health event occurs.

“Sit down with your client and ask key questions: What can we do to protect assets? Does it make sense to purchase a long-term care policy?” advises Leppones. “If you want to self-insure and roll the dice, that’s fine. You’ve made that decision versus the decision having to be made for you because a health event has occurred.”

“It all comes back to financial planning,” reiterates Nemetz. “We’d rather make these decisions when we have a long runway to execute them and implement them, than in the heat of the moment. And it’s a burden on your family to not think these things out or at least have some sort of plan—even if your plan is no plan, at least your family needs to know that.”

The Value You Add

When it comes to working with clients to create a legacy plan, “It really comes down to the value of working with an advisor,” notes Lavery. “And as an advisor, you’re there to guide clients not only with investments and planning for retirement, but also looking at their overall holistic picture. That includes ensuring they have the right beneficiaries, and long-term care and certain insurance policies have been set up.”

It takes some level of behavioral coaching.

“It can be unpleasant at times, but that’s our job to help clients prepare for these things,” admits Leppones. “I’d rather have the unpleasant discussion and at least have some type of planning in place, so when something bad does happen, I know my client’s wishes and I can rest easily saying that their wishes were taken care of.”

Working with clients to navigate the complexities of end-of-life planning ultimately helps them enjoy the peace of mind of knowing their affairs are in order. And this may be one of the most valuable things you can provide as a financial advisor.

Interested in learning more about how to help your clients develop a legacy plan? Watch a replay of our webinar Death, Education, & Taxes, which was featured during Symmetry AdvisorFest 2023.

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