Illustrations by Eva Vásquez

Alison Parker, FPFS, was contacted by clients who had just lost their 30-year-old daughter, an extreme adventurer who died in an accident while pursuing her hobby. Prior to their daughter’s death, the couple had provided her with a six-figure sum of money to buy a house with her husband.

Now the daughter had died, and it turns out she had separated from her husband. Though they were in the process of divorcing, legally they were still married. The daughter hadn’t revised her will, so the husband would inherit the estate.

“The family didn’t like him at all, but fortunately they made us aware of that before they gave her the money a few years ago,” said Parker, a six-year MDRT member from Aylesbury, England. “We drafted a family trust, and the parents put the money in the trust and lent it out to their daughter. This meant when she died, the money went back to the family and not to the husband she was divorcing. It went to her brother instead.”

The value of working with clients to create solid estate plans has the potential to benefit both clients and advisors. From helping families keep their money out of the wrong hands to developing relationships with children who become the second generation of clients, some MDRT members have found this to be an area where they can differentiate themselves from other advisors.

And, while estate planning can mean more work upfront and a longer process in general, there are also fewer objections to products and solutions because the clients understand their value by the time advisors reach the point of presenting them.

What makes a good estate plan?

Everyone should have a will in place to make sure their wishes are known, Parker said. But a will is just a set of instructions in which the client is writing down what they wish to have happen at a future point.

“But at that future point, you don’t know what the legislation will be. You don’t know what people are going to be around or what rules will have changed,” Parker said. “So it’s actually quite broad and quite loose.”

That’s why Parker also does trust planning with her clients. “A trust can build a shell around something, a fence to make sure that legacy goes to the right people, and that in future generations, it doesn’t go sideways to unintended beneficiaries.”

Estate plans are appropriate for clients of all ages, but what they include changes as a person’s age and life circumstances change.

In their 30s and 40s, it’s more about making sure their family is taken care of, so plans are usually focused on things such as risk management and children’s guardianship, said Clay Gillespie, CFP, CIM, a 20-year MDRT member from Vancouver, British Columbia, Canada. By the time people are in their 50s, 60s and beyond, they often shift their focus to be more about legacy planning.

Every client Gillespie works with goes through an estate planning process. The reason is simple, he explains to clients. “You never want the government to make decisions for you. So if you don’t do proper estate planning, that’s what you’re doing.”

To get started understanding what an estate plan needs to address for specific clients, Parker and Gillespie both begin with the client’s why. The second step is the who.

“We really focus on finding out details about the family, because every family’s different, and most families have someone who sticks out a little bit,” Parker said. “There’s a black sheep somewhere who maybe isn’t quite making the same decisions the clients would like, or maybe it’s a relationship with somebody who doesn’t fit their values. When you start to understand the family dynamics, you can really talk to someone meaningfully about where they want stuff to go and when.”

One of the most frequent reasons Gillespie sees clients put off estate planning is the family conflicts often simmering beneath the surface. Every family has issues — maybe a child they’re estranged from or a son-in-law they dislike and distrust.

As difficult as it is, it’s important to get those conversations out on the table, Gillespie said. “You want a family meeting so that when the mom and dad aren’t there, one of the kids can’t say, ‘Mom told me this’ or ‘Dad wanted this.’”

You never want the government to make decisions for you. So if you don’t do proper estate planning, that’s what you’re doing.
— Clay Gillespie

Craig Palfrey, CFP, also discusses the family component with clients, starting with sending them a questionnaire prior to meeting that asks for details about their families. When they meet for the first time, he’ll begin drawing out a family diagram on a whiteboard. He starts with stick figures of the couple and then draws out children, spouses and grandchildren as the clients explain more.

“When I show people this diagram and I put their name on it, their kids and spouses, their grandkids Johnny and Susie, it becomes real to them,” said Palfrey, a 12-year MDRT member from Cardiff, Wales.

The diagrams also make it easier to start asking the “what-if” questions that are key to a solid estate plan. Palfrey will ask a client if they want their spouse to stay alone for the rest of their life if they die. Do you think they’ll remarry? OK, imagine they’re remarried and have another child. Are you happy that the house you bought together could end up split with others outside your family who you don’t even know?

Generally the client’s answer to this is: “No, I don’t want my part of the assets to go to a spouse’s future children if I die.”

“The good news is, if we write your will correctly, we can make sure that your half is protected so that years from now, your half is going to your natural children,” Palfrey explains.

Or if a client has a pension, he’ll explain how putting the death benefits in a trust keeps it with their spouse and children and not with future spouses and their children.

“I tell people, if you’ve got an asset, pension funds, property, you should have a will and a trust,” Palfrey said.

Partnering or bringing legal in-house?

Working on an estate plan generally involves a legal expert and often an accountant as well. There are two approaches: partner closely with lawyers and accountants, or bring those specialties in-house.

Gillespie partners with lawyers for wills and trusts, but he makes sure he owns the process. If a client says they have a will, he’ll ask to review it. He often finds room for improvement, and insurance products that could simplify some of the complexities of legacy planning.

Palfrey also makes sure he controls the process, and has the solicitors and accountants work through him. “When we outsource for legal work, we insist that they invoice us and we’ll invoice the client,” he said. “At the end of the week, we also expect them to update us on their progress so we can update our clients.”

Parker and Palfrey have brought the process in-house by hiring legal specialists, with plans to add accountancy specialists in the near future.

Last year, Parker’s company, Wills & Trusts Financial Advisors, launched Wills & Trusts Solicitors. Soon, they’ll launch Wills & Trusts Accounting.

There are a couple of reasons Parker’s company decided to bring their partnerships in-house. First, they were often frustrated with solicitors who were generalists and didn’t really understand the complexities that come with building a trust. The second was that when clients died, their children were coming to Wills & Trusts Financial Advisors to ask what to do next.

“So we were getting involved with probate because the kids didn’t have a solicitor to do it formally for them,” Parker said. “And we realized we’re missing a trick here. Clients want it from us, so let’s build it into the practice.”

Palfrey also has a vision of creating a one-stop shop for clients. His firm already brought legal expertise in-house and will add accountancy in the next two to three years.

“I’d like to have it all under one roof so that we control the communication for all of it,” Palfrey said.

What about the products?

While creating an estate plan for clients draws out the process of working with them, it also makes the product recommendations fall easily into place, said Todd A. Reid, CLF, a six-year MDRT member from Salt Lake City, Utah.

“The products are essentially the gasoline in the engine to make it all work, but you have to go through all the needs and whys first,” Reid said. “You can have a fantastic plan, but if you don’t have any gas going into it — and that’s what insurance plans do — then it’s just a plan. It’s a vehicle without any gas in it.”

Reid may spend months working with clients and partnering with legal and accounting professionals before he arrives at product recommendations, but when he gets to this point, it’s never a hard sell.

You can have a fantastic plan, but if you don’t have any gas going into it — and that’s what insurance plans do — then it’s just a plan.
— Todd A. Reid

“The products speak for themselves. We have specific products developed by life insurance carriers that fit what we’re trying to accomplish for the client,” Reid said. “So the product is definitely what solves the issue, otherwise you just have a nice document but nothing’s going to happen with it.”

Gillespie agrees. “Once you have the discussion and they’re comfortable with it, the implementation is easy,” he said. “When you do estate planning, the revenue’s going to follow. You get a deeper relationship, so you’re placing more products with existing clients. You don’t need as many clients because of this, and referring becomes easier because they know you’re not just selling a product. So it makes economic sense to do estate planning.”

Plus, Reid thinks this is going to be the area to watch in upcoming years, and the sooner advisors add this to their repertoire the better. “The need for estate planning has most likely never been greater with the transfer of wealth that’s going to occur in the next 20 or 30 years,” he said. “In the next couple of years, estate planning will grow probably to the biggest demand I’ve witnessed in my 27 years in the industry.”

Why should you add estate planning to your practice?

Having a larger plan that will change and update as family situations change makes you sticky to your clients. Plus, you develop a relationship that generally extends into the next generation as you hold family meetings to explain the client’s wishes.

Objections are fewer because you understand the client’s why, and the products you put into place make sense when they’re placed into this larger framework.

Referrals come naturally. “If you spend that much time with the client helping them solve their problems, the referrals happen so much easier,” Gillespie said.

Your revenue can increase substantially once you have the process down, because it’s fixed fees versus commission-based, Parker said. She charges fees based on the type of trust or estate plan the client needs, with an annual retainer income for the ongoing reviews.

It differentiates your practice from others. “Whereas other financial planners are talking immediately about investments or pensions, we are the ones who focused on the family and the estate plan,” Palfrey said.

5 steps to getting started with estate planning

Make a decision to be a financial planning firm. “You’re not an insurance firm and you’re not just an investment firm,” Gillespie said. “You have to make that choice.”
Put estate planning questions in your pre-meeting questionnaire so clients know it’s something you’re going to talk about, and make it part of your process.
Understand the No. 1 reason clients want an estate plan. “They’re most concerned about the wrong person getting the money,” Parker said. “They really want to make sure they protect the bloodline.”
Create a process for getting the family involved, which can often occur through meetings with the client’s beneficiaries. This often leads to doing business with the second generation, who may be in need of wills, trusts, powers of attorney and financial plans themselves.
Have a proper presentation package to gather all the information in one spot for clients. “Create something the client can hold and touch, that they can put on a shelf somewhere,” Palfrey said. “Make sure the kids know where it is so if something does happen, they have all the information.”

CONTACT

Clay Gillespie cgillespie@rgfwealth.com

Craig Palfrey craig@penguinwealth.com

Alison Parker alison.parker87@gmail.com

Todd Reid treid@tbgroup.org

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