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Legacy building: Are advisors up to the task?

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Helping clients leave a legacy is one of the more difficult, and nuanced, challenges facing a financial planner.

With many retirees having accumulated significant wealth through their workplace retirement programs, and through real estate, there are more families passing on wealth to their heirs. Where historically most retirement income was generated through pensions and disappeared at death, 401(k) and IRA retirement plans have the capability of securing wealth for generations to come.

Sometimes married couples aren’t on the same page; sometimes a single client has no family but still wants to leave a positive impact; and sometimes clients simply don’t know what they want to do. Rest assured, you can help in each case.

For instance, in one case, at the end of an on-boarding meeting with a married couple who had just become clients, I assigned George Kinder’s three questions as their homework. Kinder is the founder of the Kinder Institute of Life Planning, which trains advisors in this approach, and author of “The Seven Stages of Money Maturity.”

If you’re unfamiliar with his work, here are his three questions:

  1. Imagine you have enough money to take care of your needs, now and in the future. How would you live your life? Would you change anything?
  2. Imagine your doctor says you have only five to 10 years to live. You won't feel sick, but you'll never know when death will come. What will you do? Will you change your life? How?
  3. Finally, imagine that your doctor says you have only one day left to live. Ask yourself: What did I miss? What did I not get to be or do?
For clients who avoid addressing their mortality, we as advisors should acknowledge that we aren’t trained to take someone through this process.

Most of the time, Kinder’s questions get clients thinking about how fragile life is and what they have yet to accomplish. These topics for contemplation help them uncover what they value in life. In this case, confronting the questions produced an answer that surprised not only me but also the couple themselves.

These particular new clients were a baby boomer couple nearing retirement. This was the second marriage for each, and each had two children from the first marriage. The husband had come into the marriage with more assets than his new wife, but they had built a life together as equals. They had been using another advisor but had some misgivings about the advice, cost of services and depth of the retirement analysis.

At our next meeting, the wife gave her answers and had obviously put a lot of thought into them. She knew what she valued and was starting to plan her retirement around those things.

The husband then stunned her with one of his answers. “If I had five to 10 years to live, I would want to buy [your daughter] a house,” he said. “My children are capable of looking after themselves, but [your daughter] works in an underpaid profession. She deserves to be taken care of.”

The look on the wife’s face was priceless. It was obvious she did not expect him to take care of her own extended family before his own.

As we continued working on their plan, it became obvious that this goal could become a reality, and their plan started to take on a deeper meaning for both of them. Clearly, this shared goal would greatly impact their financial legacy and bring them closer together as a couple.

I have to admit that I am sometimes so caught up in my role as an expert that I am overly eager to come up with answers to clients’ problems instead of facilitating their own discussion. Like people going through therapy, clients often have the answers to their problems — they just need the time and space to work them out.

As I reviewed this couple’s estate planning documents, I stopped myself from explaining why buying the daughter a house might be in conflict with the existing overall goals of their financial plan. Instead, I asked them if the documents still met their wishes or if they thought they should be adjusted.

As this couple discussed it, it became apparent that their estate was not designed to match their recently uncovered values, and even the way their investment accounts and real estate were currently structured might need adjusting. We explored how moving assets between various titling structures would affect how much each of their heirs would receive and which approach best achieved their new plan. With minimal direction from me, this couple put together a draft of their estate plan to extend their legacy as they desired.

Many of my clients are single women — some divorced, others never married, and some who don’t have any immediate family. When we discuss their legacy, it can become an uncomfortable conversation. For those whose closest loved ones have died, it reminds them of what used to be. For those with no immediate family, it provides a reminder of their physical loneliness.

While seeing the pained emotions of our clients can be troubling, these conversations are important. They are often ignored when a client tries to go through them alone and that’s when planning and legacy-building opportunities are missed.

It brings a smile to my face when news stories arise about quiet, and seemingly lonely, individuals who leave millions to charity at their passing. While these people may not have had many people in their life, they were intentional in identifying who would benefit from their finances when they were gone. Without a family to extend their legacy, they extended it through cherished charities and causes.

They accepted that they were alone and decided to focus on how they could benefit the most people with their legacy. It’s my goal to encourage my single clients to appreciate their discomfort and pain, but also push through to determine whom they will impact when they die.

In my career to date, it’s been rare to find a situation where someone has no idea what they want their legacy to look like. But I do have one client who is stumped, and it’s causing a roadblock in her estate planning.

When I ask her what she wants to happen should she have money left over at her death, it’s met – after a long pause – with, “I don’t know.”

This seems to be a case of not knowing what values and causes are true and valid, and, in turn, not being able to verbalize an answer because there isn’t one. I’ll admit this discussion made me uncomfortable when it first happened. After further discovery questions, there were still not any clear answers. The meeting ended with the topic of legacy planning being left on the table. And it’s OK.

Like people going through therapy, clients often have the answers to their problems — they just need the time and space to work them out.

For clients like this, addressing their mortality isn’t something that they can process easily. It’s also something that we as advisors should acknowledge, knowing that we aren’t trained to take someone through this process.

It’s the job of a therapist or counselor to help someone understand why they are having trouble accepting their mortality and what should happen when they die. As I left that meeting, I encouraged my client to keep thinking about these issues and explore different ideas about what her legacy might be.

My hope is that she’ll be able to write a legacy story of which she’s proud and that she can put in place before it’s too late. But if she’s still having trouble at our next meeting, I’ll be recommending she talk it through with someone more qualified than me.

At the end of the day, everyone deserves to write his or her own legacy story.

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