At some point in their careers, many senior market advisors start to move beyond sales to incorporate more estate planning work with clients. It’s a logical progression because seniors are naturally more focused on estate planning than younger clients. Additionally, older clients are often wealthier and need a wider range of advice, products and services. Senior Market Advisor asked several successful advisors how they transitioned to estate planning.
Lay the groundwork
Greg Gagne, ChFC, with Affinity Investment Group, LLC in Exeter, N.H., started as a financial services rep for MassMutual fresh out of college in 1992. The early years were difficult, he admits: “I was squeaking by but I was having a very difficult time managing the peaks and valleys of being in the transaction-orientated business. I was desperate to find a method where I could have recurring revenue…that’s why I moved toward a fee-based model.”
Gagne spent about a year talking with centers of influence, such as CPAs and attorneys who worked with older clients; he also started learning about the financial and personal issues that seniors encountered. At the same time he started developing his technical knowledge. “I needed to become versed in probate avoidance, different types of ownership and how that works for estate planning, utilizing trusts, powers of attorney and basic legal documents,” he says. “Once I garnered that knowledge I began implementing it with each and every client that we work with within our firm.”
Plan the transition
Irv Birnbaum, CLU, ChFC, CFP, came to financial services with MetLife in Chicago after working as a chemical engineer and running a computer business. His analytic skills led to his interest in more sophisticated, complex cases and now estate planning accounts for about half his business.
Birnbaum’s suggestion for advisors considering the estate planning market: develop a business plan. That plan should include advanced professional education—Birnbaum recommends the Accredited Estate Planner program that the American College offers. Determine how you’ll market yourself to accountants and attorneys, he advises, and don’t hesitate to explain that you’re seeking reciprocal referrals as well.
Don’t sell yourself short
Steven Plewes, CLU, ChFC, started out in 1976 as door-to-door debit salesman for Prudential Insurance. Today he owns Advisors Financial Group in Gaithersburg, Md., and many of his clients are corporate executives and widows. He cautions that moving from sales income to advisory fees can take time and advisors should have adequate cash reserves for the transition.
It’s also important to charge fees that reflect your experience and expertise, Plewes notes. “You want to charge your fees at a level comparable to the other professionals that your clients are working with,” he says. “If the client is working with an attorney who is charging $300 an hour and a CPA that’s charging $200 an hour, you can’t bill yourself out at $75 an hour or else you’ve instantly diminished yourself in their eyes. You need to charge something in that same range of $200 to $300 so that they view you as the same level of professional that the other advisors are.”
“I needed to become versed in probate avoidance, different types of ownership and how that works for estate planning, utilizing trusts, powers of attorney and basic legal documents.” Greg Gagne, Affinity Investment Group, LLC
Common estate planning mistakes… and how to avoid them
Estate planning can be complicated and it’s not uncommon for people to make mistakes with their plans. But financial advisors make errors, too, so we asked several advisors to identify the most common mistakes they encounter from other financial planners.
1) Improper beneficiary designations
We frequently see advisors improperly completing beneficiary designations. Examples: Not changing the beneficiary due to divorce or a death or listing a special needs child or grandchild directly as a beneficiary, rather than a trust FBO (for benefit of), thereby affecting their eligibility for Social Security disability benefits.
~Kevin Reardon, CFP; Shakespeare Wealth Management, Inc., Pewaukee, Wis.
2) Not changing asset titles to trusts
Incorporating revocable living trusts into a client’s estate plan but forgetting to update all the account titling to the name of the trust. Not changing titles creates problems that include having to pay additional probate costs, losing the private nature of settling the estate, etc.
~Richard Durso, CFP, AEP; RTD Financial Advisors, Inc., Philadelphia
3) Incorrectly assuming clients’ goals
Many advisors assume a client’s main goal is to save estate taxes, for example. However, when really connecting with a client we might find that taxes are only a small aspect of their objectives. Sometimes in listening to the client we realize that their fears are more about their heirs’ ability to manage the inheritance as well as decisions such as trustees, etc.
~Richard J. Busillo, CFP, AIF, RPA; RTD Financial Advisors, Inc., Philadelphia
4) Naming minor children as account beneficiaries
Letting clients name minor children outright as primary or contingent beneficiaries of life insurance or retirement plans. When minor children inherit, a court must appoint a guardian who must be bonded and must file a laborious annual accounting with the local court.
~ Helen Modly, CFP, ChFC, CPWA; Focus Wealth Management, Ltd., Middleburg, Va.