The relationship between a retirement-planning client and his financial advisor is a dynamic and multifaceted one. Or at least it should be. Consider what’s at stake: more to lose and less time to recover from any losses. Barring a return trip to the job market during one’s golden years, a do-over may not be in the cards.
As a professional advisor, shouldn’t it be standard practice to integrate retirement-planning services with the work of other professional advisors (namely estate-planning attorneys, tax accountants and insurance agents)? Here are five reasons why this is a no-brainer for clients and advisors alike:
- Spending months and years designing a retirement plan without the counsel of an estate-planning attorney is very shortsighted. Failing to consider proper wills and trust planning can result in significant missed opportunities (or errors) with regard to proper beneficiary designations, asset ownership provisions and tax losses.
- A tax accountant rarely requests clients show them copies of investment account statements. The accountant may find all the available deductions but miss the pent-up and growing tax burden lurking inside the tax-deferred annuities and IRAs that the aging client has no plans to draw upon. Beneficiaries may be mighty disappointed to learn that strategic income-tax planning could have saved many thousands of dollars in unnecessary tax.
- What happens to a client’s financial security when an at-fault car accident occurs and forces her to liquidate half her nest egg due to inadequate casualty limits? This scenario is easily avoided by partnering with an independent insurance agent to review clients’ policies. If done effectively, the client may actually save money on her insurance.
- As an advisor, you may worry that another professional will stall your plan. But consider this: If the plan becomes stalled, maybe it wasn’t a good one and should have been stalled to protect the client’s interests. On the flip side, you can take comfort in the checks and balances that come with having one’s work reviewed. It’s worth pondering.
- Clients should not just find comfort in an integrated approach but demand one. After all, the act of building a sensible and effective retirement plan is not necessarily an easy task. Advisors should therefore make it as easy as possible to care for clients and their families in a coordinated fashion.
When professional advisors come to realize the substantial benefits of working as part of a team, the client ends up the winner. Ultimately, that should be the goal, right? Is it easy? Nope. Is it worth the trouble? Ask your clients.