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Financial Planning > UHNW Client Services > Family Office News

6 reasons every advisor needs an ethical will

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If you’re a loyal reader of this column, you know I often write about compliance matters — i.e.,  the regulatory requirements that assure transparency, fair competition, and privacy, among other things.

But you also know I commonly write about ethical issues. Unlike compliance, which is rules-based, ethics consists of personal values that guide our conduct when compliance rules are unclear or missing. By acting in a compliant and ethical fashion, advisors will not only avoid regulatory scrutiny, they will treat prospects and clients the way they should be treated, with fairness and respect. This benefits all concerned: advisors, intermediaries, carriers and customers.

However, let’s up the ante. I believe being compliant and ethical is just the starting point. Advisors should also pass their ethical values along to the next generation. In other words, they should build a permanent legacy, which I believe is the highest expression of business (and personal) ethics.

Legacy-building has two aspects: work and personal. In the office, advisors should first build a succession plan. This plan should also incorporate the advisor’s ethical code so that those who take over will (hopefully) continue to run the business with integrity.

At home, advisors should document and pass along their values to their families. This presumes a lifetime of instruction and motivaton, capped by the writing of a so-called ethical will. Unlike regular wills or trusts, which define how assets are conveyed to heirs, an ethical will conveys intangible values and guidance to one’s family. Since its format isn’t legally prescribed, it can be harder to develop than a will or trust, but equally beneficial.

Difficulties notwithstanding, advisors should consider writing an ethical will — also known as a legacy letter — for six reasons. According to Andrew Weil, an expert on healthy aging, ethical wills serve to:

  • Provide a vehicle for leaving something behind, for being remembered.
  • Help you document your history and stories for others to learn from in the future.
  • Provide an opportunity to clarify your values before passing them on.
  • Produce self-awareness and understanding.
  • Give you the chance to accept past mistakes and to come to terms with your mortality.
  • Create a fulfilling sense of completion and accomplishment.

Now, summarizing a lifetime of experience and conveying your most deeply cherished values to your family in one document can be daunting. But here are some pointers to get you started:

  • Think about the essential wisdom you acquired over the course of your life. Write it down and pass it on.
  • Recall the formative experiences that shaped your personality and values. Share those stories.
  • Reflect on the blessings you’ve had in life. Enumerate and recognize for them.
  • Discuss the key challenges you overcame in life. Provide guidance to your children for surmounting their own challenges.
  • Consider what you learned from your parents. Pass that knowledge on to your family.
  • Express your hopes and dreams for your children’s future.
  • Decide whether to share your document now or upon your death.
  • If all goes well, consider encouraging your clients to do the same. This can be helpful for encouraging the sound stewardship of inherited wealth.

In short, there is no right or wrong way to create an ethical will. Just write from the heart and capture your thoughts in a format that’s meaningful and motivating to your family. By transmitting your ethical values in this fashion, you’ll not only help to shape your children’s lives, but also those of their children, grandchildren and great-grandchildren. Now if that’s isn’t a supercharged legacy, I don’t know what is!


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