4 minute read

Why Financial Planning Firms Should Offer Estate Planning To Their Clients

Unlock the power of holistic financial planning– learn why integrating estate planning is essential for financial planning firms and their clients.

Samuel Deane

Samuel Deane, @samueldeane

Founder, Deane Wealth Management

In the ever-evolving landscape of financial advisory services, the role of financial planners transcends just crunching the numbers. Today, it's about crafting a comprehensive, holistic financial journey that aligns with each client's unique aspirations and needs. This article delves into the profession's evolution, illuminating the pivotal role financial advisors play in their clients' lives. We explore the transformation from traditional financial planning to a more integrated approach that seeks to create a truly holistic client experience. Furthermore, we unveil the immense value that arises from seamlessly integrating estate planning into the financial planning process, providing clients with a roadmap for a secure financial future and a lasting legacy.

The Evolution of Financial Advisors

The financial advisor profession has come a long way since its inception, evolving from insurance sales and brokerage services into the comprehensive financial planning field we know today. This journey reflects not only changes in the industry but also the shifting needs and expectations of clients seeking financial guidance. The early days of financial advice were predominantly centered around insurance sales. Agents primarily offered life insurance policies and annuities to individuals and families. While insurance served an essential purpose in providing financial security, these agents had a relatively narrow focus compared to modern financial advisors. The mid-20th century saw the emergence of brokers who facilitated securities transactions. They helped clients buy and sell stocks, bonds, and other investments. While this expanded the scope of financial services, it was still primarily transactional and lacked the comprehensive planning approach that characterizes modern financial planning. For the most part, consumers still had to actually pick up the phone to call their advisors to place trades or vice versa — and that was the only access they really had. 

As the world of financial advice evolves, so do the services that advisors provide to clients and the business models by which we operate. The shift towards comprehensive financial planning began in the 1970s and gained momentum in the following decades. Several key factors contributed to this transformation:

  • Growing Complexity: As financial markets and investment products became more complex, clients needed expert guidance to navigate and implement them effectively.

  • Changing Demographics: Baby boomers started to retire, and their financial needs shifted from wealth accumulation to retirement income planning, estate planning, and wealth transfer.

  • Regulatory Changes: Regulatory bodies like the Certified Financial Planner (CFP) Board and the Investment Advisers Act of 1940 set higher standards for financial advisors, emphasizing fiduciary responsibility and ethical conduct.

  • Client-Centric Approach: Advisors began focusing on understanding their clients' unique goals and circumstances, leading to a more personalized approach to financial planning.

Creating a Holistic Client Experience

This evolution is a testament to the profession's adaptability and commitment to meeting the diverse and evolving needs of clients. Today, the financial advisor profession reflects a broader shift towards a client-centered, holistic approach to financial well-being. Today's financial advisors are not product sellers. Instead, we are trusted partners who collaborate with clients to achieve their financial goals and dreams. If you ask a financial advisor in the independent RIA channel, almost all of them will tell you they provide a holistic experience for clients. But what does that really mean? From my perspective, this looks like gaining a deeper understanding of our client’s financial lives. It encompasses not just their investments but also their financial goals, cash flow, debt, insurance, taxes and estate planning needs. This type of client experience ensures that all strategies are interconnected and work in harmony, which ultimately prevents conflicting advice or disjointed financial decisions, helping clients achieve their goals efficiently. 

In the same fashion, holistic financial planning and long-term thinking enhances short-term decision making. Clients often have multiple financial goals, such as buying a home, funding education, or retiring comfortably. If we, as financial planners, take a holistic approach, we can help clients prioritize these goals and create a roadmap for achieving them. Not to mention, we all know that life is dynamic, and clients' circumstances change. Creating a holistic client experience involves a commitment to understanding each client's unique financial circumstances and delivering tailored solutions that address their goals and needs comprehensively. By offering a full spectrum of financial services and maintaining open communication, financial advisors can build long-lasting relationships that support their clients' financial success.

I’ve heard first-hand from clients who say they experience peace of mind when they know that their entire financial picture is considered and planned for. In almost every case, taking a holistic approach reduces anxiety about money related matters and improves their overall well-being. This is ultimately why we decided to include estate planning, tax preparation and insurance into our firm’s service offering. Most importantly, when clients can have a relationship with us akin to a therapist, it fosters trust and vulnerability. In my opinion, making space for delicate conversations is table stakes if you want your clients to do the not-so-easy things you may recommend. Let’s look at estate planning as an example. 

Estate Planning as a Value-Add 

At its core, estate planning is the art of securing your clients' financial legacies and ensuring that their wealth is distributed according to their wishes. It goes far beyond just drafting wills and designating beneficiaries; it's a comprehensive strategy that can significantly impact the financial well-being of our clients and their families, and it should be at the forefront of your financial advisory practice. Not to mention, this generation is witnessing the biggest wealth transfer in history. Why wouldn’t you want to play a role in that? In the dynamic world of financial advice, the best financial advisors are continually exploring ways to better serve our clients and enhance the value we provide. As we delve into various strategies and financial planning tools, one aspect that often doesn't receive the attention it deserves is estate planning. As financial advisors, we have the opportunity to transform our practice and enhance the lives of our clients by incorporating estate planning into our financial planning process — and there’s lots of value in that. Our clients' financial well-being isn't solely about them; it extends to their family members, including children, elderly parents, or disabled dependents. As good stewards of money, we are empowering our clients to preserve their wealth and secure their legacy for their loved ones. 

However, I personally know many financial advisors who struggle with implementing estate planning. And I’m not here to point fingers because I’ve been there. When I launched my firm, estate planning was a pain point that was challenging to solve for our clients. Since most of the families we are working with are at the heights of experiencing a liquidity event, equity, taxes, cash flow and even emotional wellbeing are bumped up to the top of the priority list — and rightfully so. As we continued to build out the framework of their financial plan, estate planning generally fell to the bottom of the totem pole. While technology has allowed us to advise clients across the country, it also presented a challenge when referring clients to estate plan attorneys in their specific state. We would educate families on the importance of estate planning, and refer them to local attorneys, but the majority of clients would procrastinate on actually creating their estate plan. That’s when we came to the realization that estate planning starts with education, processes and accountability — for both advisors and clients. 

The impact of rolling out estate planning to our clients cannot be understated. Within the first 12 months of prioritizing estate planning, implementing, our firm completed estate plans for over 65% of existing clients and 100% of new clients. As a firm, we have done more estate planning in the last 18 months than we have in previous years combined. To that point, we have built workflows and processes to ensure that estate planning never slips through the cracks. Leveraging estate planning translates to taking a comprehensive and holistic approach to financial planning and wealth management. It enables us to add value around the needs of our clients and be a true one stop shop for all things money. If you ask financial advisors what the advisory firm of tomorrow looks like, they will undoubtedly echo these sentiments.

At Trust & Will, we’re here to help keep things simple. You can create a fully customizable, state-specific estate plan from the comfort of your own home in just 20 minutes. Take our free quiz to see where you should get started, or compare our different estate planning and settlement  options today!

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