Close Close

Financial Planning > Trusts and Estates > Estate Planning

Wealthy Seek Understanding Of Sophisticated Strategies

Your article was successfully shared with the contacts you provided.

Economists predict that in the next generation we will see an unprecedented transfer of wealth from the senior generation to their heirs, amounting to tens of trillions of dollars changing hands. For the ultra wealthy, having a comprehensive estate plan is essential to maintaining and passing on the wealth they have accumulated.

Although the importance of an estate plan may be apparent to them, the difficulty arises when the level of complexity goes beyond their understanding. One naturally assumes that a wealthy or financially successful individual would be sophisticated enough to understand estate planning.

While some can or will, more often than not, they do not have the time it takes to understand the legal concepts and technical language involved with sophisticated estate planning. The client’s estate planning attorney would be the obvious person to answer questions the client and his or her family have.

Affluent clients left confused

A recent survey conducted by Prince & Associates found that more than 90% of the wealthiest families polled could not determine if the final plan presented by their attorney would help them accomplish their goals. The same survey found that more than 80% of attorneys failed to follow up with a client for whom they had designed and prepared estate plans that were never implemented.

Unfortunately, attorneys more often than not fail to identify the client’s estate planning need, clearly explain the strategies and their impact on the client’s estate. Or they fail to follow up with the client to make sure the documents are executed or the plan is implemented. While you cannot replace an attorney, this failure presents an opportunity for you, the life insurance professional, to help ultra wealthy clients understand and implement intricate estate planning strategies.

Traditionally, life insurance professionals have deferred to attorneys to explain and guide clients through the estate planning process. It is clear, however, that a need exists to help clients understand their estate plan. You have a unique opportunity to step into the role of a trusted family advisor if you can assist the client in successfully navigating the estate planning process. Taking on this role creates opportunities to develop and keep a long-term relationship with your clients.

Bring clarity to complex strategies

Having the necessary knowledge and tools to help clients understand various strategies is an essential part of this task. Assisting the client in understanding, in laymen’s terms, the various strategies that exist would go a long way in helping the client implement the planning. Moreover, it also places you in a position to become the client’s valued advisor. Take advantage of the resources available to you from various sources, including life insurance companies, to educate yourself and to provide materials to your clients.

In the role of trusted advisor you would have the opportunity to not only build the relationship with your client, but also to expand your business. Successful multi-generational transfers of wealth occur with competent planning and cooperative clients. Laying the foundation for the client to understand estate planning strategies is just the first step. Sophisticated estate planning, however, does not happen overnight.

Often, implementing the estate plan will occur over many stages. Each phase will contain different strategies and may add layers of complexity as well as involve other members of the client’s family. As this happens, the need for communication and information among the family members and legal, financial, and tax advisors becomes all the more important.

The family meeting

A common practice in this situation is to hold family meetings conducted by outside professional advisors. Family meetings are an ideal way to inform members of the family about the planning and prepare them for the transfer of wealth.

The meetings also allow for a neutral and professional setting where family members can freely discuss questions and concerns. This can save the client from being put in the potentially awkward situation of discussing delicate financial matters with children over the dinner table or being caught off guard by questions from children.

By conducting a family meeting for clients, you not only help them and their families understand the estate planning undertaken, you also establish relationships with members of the junior generation of the family. Because you are a trusted advisor of the senior generation, members of the junior generation would naturally turn to you for advice if they do not already have advisors of their own.

Navigating the ever-changing world of financial and estate planning is a constant challenge for ultra wealthy families. They look to financial and legal professionals to guide them through this process. Filling the role of trusted advisor for your client will help you to cultivate a long-term relationship with your client. More importantly, that trust places you in the unique position of being the person that clients think of when they need answers to tough questions or planning issues.


© 2023 ALM Global, LLC, All Rights Reserved. Request academic re-use from All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.