Getting Boomers To Face Their Own Mortality
“Boomers seem to feel good once its over,” says Kathy Hamm, a financial advisor with Lincoln Financial Advisors, Cincinnati.
She is referring to boomers completing a comprehensive financial planand particularly, the piece having to do with their own death.
A lot of boomers would rather talk about any financial planning topic than their estate plan and their death, explains Hamm.
How to move the dial to that sensitive area? First, say financial professionals, it is important to recognize that there is often resistance to discussing ones own death.
Boomers tend to be very good at making excuses about why they are putting off this kind of planning, explains Dwight Moldenhauer, owner of Moldenhauer Advisory services, Buffalo, N.Y. “Some male boomers will say, Well, my wife wont need that [life insurance or whatever]. She has a job and the mortgage is taken care of if I die.” Yet, when Moldenhauer looks into the existing finances, he says he often finds that their planning greatly lags behind their actual situation. For example, clients may still have the same amount of life insurance they carried when just entering the work force, even though they are now managers, executives and business owners, he says.
It can be discouraging, he adds. “Some of the boomers seem almost entirely focused on their individual needs, not on the needs of their dependents and survivors.”
It is the job of the agent to help boomer clients see what they need to do, Moldenhauer contends, adding “the computer models they can use on the Internet are not going to do it for them.”
Hamm agrees. “Dont shy away from the subject. Rather, make it part of the comprehensive plan.” For example, the advisor should bring it up by asking, Where does your estate plan stand currently?
She often starts by asking simply, “Where are the documents, the will, the trust and so on?” Often these documents are way down on the boomers To-Do list, Hamm says. “They will say, Im too busy. I havent gotten to it yet.”
But, if the boomers have children, they really need to have these documents, Hamm says. To help them see that, she asks things such as, “Who will handle the money for the kids if you die?” And, “What about your spouse if he or she is still alive then?”
If the boomers decide they want to have these documents, she offers to put things in motion. For instance, if the clients dont have their own attorney, she offers referrals.
And, she says, “I set up the first meeting with the attorney and have everyone come to my office to discuss what is needed.
Then, when the documents are ready for signing, I go to the attorneys office with the clients. That way, I know that everything has been taken care of and what else needs to be done, such as re-titling assets, changing beneficiaries, etc.,” Hamm says.
All this work with documents becomes the door-opener to discussing the other issues that surround mortality.
For example, Hamm says, “well start talking about additional survivor needs for cash flow, and see if there is additional need for life insurance and disability insurance.” Long term care insurance tends to come later.
These discussions progress naturally to reviewing needs, product types, costs, pros, consand death. “You have to bring that up,” she stresses. “You have to look at what the problems and circumstances are going to be if the client dies.”
Daniel Veto, chief marketing officer, Bankers Life and Casualty Company, Chicago, believes that the advisor sometimes has to “provoke” boomers into thinking about their own death.
There are certain ages in life that are milestones, he explains. They are ages 16, allowed to drive; 18, allowed to vote; 21, allowed to drink alcohol; 40, mid-life crisis; and 65, move into retirement. After that last milestone, Veto says, “many people feel they are on their own, and they do start to confront their own mortality.”
But boomers are not there yet, he says. “They are still immortal,” he quips. This is why provoking the discussion can be very important.
Thats what William H. Kimbrell, an advisor with Estate Conservation Strategies, Orange, Calif., sees, too. “My experience has been that death is the furthest thing from the boomers mind. They are still concerned with supporting their lifestyle and paying for their kids to get through collegeThey see people living longer, too, and working longer and starting families later.”
Still, Kimbrell says some boomers do have awareness. “If they are the breadwinner, they want to know what happens if they croakWhen we start talking about life insurance, they want to buy it. They recognize the need for the death benefit, particularly if they are married and have kids and a mortgage.”
But wanting to address these issues is not enough, he points out. It takes money, too, and that is something boomers do not always have in great quantities.
For example, says Kimbrell, when presented with a variable universal life policy that would take care of their need, many boomers will say “that sounds great, but I cant afford it.” Many of his clients are in manufacturing and contracting, he explains, and the cash flow just isnt there. “These clients will say, the money has to come from someplace!”
As a result, he says, “I sell most of them term life insurance.”
But, for the people who already have made their money, Kimbrell does move into estate conservation and related areas, and he says the discussion of mortality is not that difficult.
“It is not impossible for the advisor to broach the subject of death with boomers,” contends Veto.
He points out that 3 emotionsego, worry and guiltcome into play. These are areas of “discomfort” that the advisor can address, presenting insurance as a means of building ego and relieving worry and guilt, he suggests.
Regarding ego, “most people will say they want to stay independent to the very end,” he says. “They want to leave a positive legacyto be remembered as a vibrant self-actualizing person, not someone who left other people holding the bag” on the financials.
Concerning worry, he says advisors may encounter boomers who have “nagging feelings” about the choices they made in their lives, particularly as it relates to their children.
About guilt, women may be second-guessing their choice of pursuing a career vs. staying home with the kids, he says, while men may be re-examining their decision to work 80-hour weeks instead of spending more time with the family. Some boomers may believe their adult children will respond to perceived slights later on by ignoring their elders during old age.
“Im not talking about fear,” Veto says, in reference to advisors having discussions with clients that touch on these subjects. “Its not good to stir up fear or try to intimidate people into buying,” he stresses.
Rather, he says, the discussion should progress in a positive way. For example, the advisor could ask the boomer clients how they want their final chapter to be written.
Research shows boomers have “chronically undersaved,” Veto points out, “so the burden on their children will be huge, if the boomers do not prepare” for their eventual death. In that context, buying long term care insurance, annuities and life insurance, setting up an estate plan, and creating wills and other documents “can be a real gift” to the family, he says. “Its a positive.”
Some boomers do say, “I cant afford it,” allows Hamm. But others say, “OK, Ill allocate $5,000 a year for insurance and you set it up the best way.”
The survivor issues are not as important if the client is single and has no children, she points out, adding that many such clients already have legal documents, like wills. Typically, they leave their money to aging parents, siblings and nieces and nephews, she says. So, in the planning environment, they focus on other priorities, like retirement and disability issues.
As for single people with children, the scenario is much the same, “except they always look ahead to what will happen, if something happens to them” before the kids are grown.
Every client is different, Hamm says, and the actual plan depends on what is important to each one. “I always show alternatives and emphasize that there are no rights and wrongs in this.”
Still, she and the other advisors believe that the sensitive topic of death, and the uncertainty that it entails, should be on the list of topics to address with baby boomer clients.
Reproduced from National Underwriter Edition, November 18, 2004. Copyright 2004 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.