Estate Planning Begins with “WHY?”

The current environment requires financial advisors and planners to be well versed in a wide array of products, services, and planning techniques. This is a daunting task, but is especially difficult when seeking to explore a client’s financial needs in an area outside the advisor’s comfort zone. Take estate planning, for example. For many advisors, this discipline requires new knowledge and skills that they weren’t required to have in prior years. If that is the case for you or advisors reporting to you, take care to avoid the classic mistake of focusing on the planning techniques instead of beginning with “why?”

Here is the 1-2-3 progression of what typically happens when advisors first begins talking with clients about estate planning needs:

1. WHAT. They tend to spend most of their initial time talking about “WHAT.” They seek to educate the client on the need for estate planning, focusing on the “WHAT” of transfer tax regulations and planning techniques. Within a few minutes, the client is confronted with a host of technical terms like: “Applicable Exclusion Amount,” “the DSUEA,” “Charitable Remainder Trusts,” “GRATs,” “QPRTs,” “ILITs,” etc. If not turned off, most clients will be confused or frustrated.

2. HOW. If the client asks for further explanation about a planning technique or if the advisor has already decided that a particular technique is applicable, an ILIT for example, then the advisor buries the client with the “HOW” of the mechanics, with terms like: “the three year rule,” “Crummey letters,” “the need to avoid incidents of ownership,” “who can or cannot be trustee,” etc.

3. WHY. Finally, somewhat dazed, the client says something like, “I don’t understand. Why would this be something I should consider?” Finally, the advisor gets to the “WHY,” and the advisor begins to talk in fairly simple terms and without jargon, explaining why the client might benefit from some planning to address a particular need.

I am exaggerating a bit…but not much. All to often, when the subject matter is new to advisors, they tend to focus on all the details they have committed to memory, often derived from their latest training program; details that may be of little initial interest to the client. More important, they tend to forget that their role as advisors is NOT to be the technical expert who will put the plan together; rather, they bring value to the client by helping the client see potential planning needs and opportunities, and helping the client get with an estate planning professional who can better determine what actual solutions should be put in place.

Don’t allow yourself or those reporting to you to make this mistake. When talking with clients about something as technical as estate planning, reverse the order, always beginning with “WHY.” Always focus on the needs those planning solutions are designed to address, speaking plainly and without jargon. To be sure, seek to be as knowledgeable yourself as you possibly can regarding “WHAT” and “HOW,” because without this knowledge you are ill-equipped to identify potential needs and opportunities with clients; but always begin your conversations with clients by focusing on “WHY.” Proceed into “WHAT” and “HOW” only as needed to help the client understand that potential solutions to their needs may be available.

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