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Serve The Client, And Later The Beneficiaries

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The age-old marriage vow, ’till death do us part,’ may serve as a fine expression of the permanence of the commitment between bride and groom. But as regards the pledge between advisor and client, the following modification may be in order: ’till value is no longer provided.’

The reason, producers would agree, is because the professional relationship effectively can live well past a client’s passing if the advisor secures the confidence of the client’s life insurance policy beneficiaries.

“The more that clients see us as valued advisors, the likelier their beneficiaries are to turn to us for help in managing death benefits proceeds or inherited assets,” says Todd Bramson, a senior associate with North Star Resource Group, Madison, Wis.

Aggregate death benefit proceeds are huge–and growing. U.S. insurers collectively paid $49.5 billion to policy beneficiaries in 2003, according to the National Association of Insurance Commissioners Annual Statement Database via National Underwriter Insurance Data Services/Highline Data. That’s up from $47.2 billion and $46.7 billion in 2002 and 2001, respectively.

How to keep these assets under management? An important first step, producers say, is to include beneficiaries–particularly spouses–in financial planning discussions with insured clients, both during the initial data gathering phase and when conducting follow-up reviews. Such broad-based talks take on added importance as clients edge into their retirement years, they add.

Derick Gant, president of Gant Investment Advisors, Toledo, Ohio, uses these reviews to acquaint beneficiaries with plan details and key documents to which they’re named parties, and to demonstrate the trust clients have vested in him. He seeks reaffirmation, too, of the insured’s faith in his ability to work with the beneficiary (usually a wife, he says) after the insured’s death.

“I tell clients, ‘you pick the person who you think will work best with your wife–someone who won’t condescend to her or talk over her head,’” says Gant.

Or leave her in the lurch. Ronnie Metcalf, a managing director for ING Financial Partners, Greenville, S.C., says that when life insurance policies are purchased independently of a comprehensive financial plan, beneficiaries frequently are at loss. Often, they’re uncertain about where to park proceeds or how to provide for other surviving family members.

ING connects with these prospective clients through “Successful Money Management” seminars at colleges and universities in Greenville. The two and one-half hour sessions, of which there are four, serve as a primer on investment vehicles and strategies.

The seminars typically attract from 85% to 90% of invited policy beneficiaries. A comparable percentage, says Metcalf, become long-term clients.

To be sure, most beneficiaries in the days following an insured’s death are thinking about short-term needs, not long-term planning. These include financial and emotional support required in an advance of a death benefit check, which might take several months to disburse after remittance of a death certificate.

“Generally, beneficiaries want to very quickly address their financial situation once there is a death–within weeks, if not months,” says Thomas Spitzer, president of Summerville Advisors, Portland, Ore. “But the goal is to put the money somewhere, as opposed to doing comprehensive planning. The beneficiary needs hand-holding and time to adjust.”

Gant says his company will oftentimes advance payment against policy proceeds to cover funeral and other immediate expenses. In addition to expressing condolences to the beneficiary, he’ll attend the decedent’s funeral and offer to help prepare claims on third-party insurance policies.

That assumes the beneficiary can find them. Mark Kaizerman, president of Kaizerman Associates, Natick, Mass., counsels clients to assemble a “beneficiary directory,” a file containing, or identifying the locations of, important documents and contacts. Beyond the obvious ones–insurance policies, will, trust papers, health care proxy, durable power of attorney–the directory should include marriage and birth certificates, bank accounts, burial instructions, adoption agreements, titles to car and home, plus locations of safety deposit boxes.

Kaizerman further advises clients to assemble an “access list” of people entitled to see the directory and under what circumstances (e.g., at the time of the client’s death or disability), and to maintain a duplicate of the directory (including therein cross-references to the locations of original documents) with the client’s financial advisor.

“Our mantra is ‘one file, one location, one call,’” says Kaizerman. “Advisors who really want to provide a value-added service to clients need to leverage this tool, which is specifically designed to deal with the transfer of resources from one generation to the next.

“The directory dramatically enhances the relationship with the client, creates a bond between advisor and beneficiary, and delivers a service that is non-product-related,” he adds. “As the directory’s ‘access administrator’–the first person beneficiaries call–the advisor will also meet with them when money [estate assets] is in motion.”

And that meeting will occur when the beneficiary’s sense of loss is most acute, producers say. However financially rewarding relationships with beneficiaries prove to be, the death of a client can be a sobering and transformative experience, they add.

Observes Metcalf: “You grow up in a hurry when you start handling death claims. A lot of advisors are afraid of death and don’t want to talk about it.”

‘The beneficiary needs hand-holding and time to adjust’


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