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Most money conversations I have with my clients are really about values, hopes, dreams and, overall, making the most of their lives. When I ask a client how her granddaughter is, she won't say "Great, her UTMA account was up 2 percent last month in a down market!"
But that leads me to wonder about a life conversation many advisors don't have with clients — the one about death. We make sure the basics are squared away — beneficiary forms signed and wills updated — but that is often considered as far as an advisor should go on the subject of death. I can't blame any advisor who does think that's enough; death is the least comfortable topic anyone could be asked to talk about. But it is the one topic everyone will have to face at some time in the future.
My father-in-law passed away recently. That brought back feelings from when my own father died 15 years ago, which still feels like yesterday. Nothing can prepare you for such a loss — not emotionally, anyway. But the emotional support from my family and friends helped. It's one of the only things that helps to get you through it.
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So I decided that having a conversation with clients and their loved ones to form a sort of checklist to follow when it comes to the end-of-life situation isn't going too far — it is part of my job. They are less likely to miss important details, and they don't have to rely on a hodgepodge of advice from advisors, attorneys, religious/spiritual leaders, friends and even their funeral director.
But how to broach the subject? This is not a casual client dinner conversation.
As a financial advisor, I start with where I do have experience. One important skill that helps here — offering basic financial advice:
Update your retirement account beneficiary designations when you marry.Do it again when you have children.Update your will, and speak to a trust and estate attorney.Then it is possible to build on that primary advice:
Make your taxable account a TOD (transfer on death) account.Title your non-retirement accounts in a trust, gifting assets to your children and grandchildren.Use a 529 account for gift-maximization purposes.The list does not stop there, but none of these individual financial steps deal with the fog that surrounds a person upon the death of a loved one. Death is a life event just as much as it is a financial event, and the financial services industry needs to better understand — and incorporate — that fact.
We spend so much time preparing clients to buy a house, educate children and save for retirement, and we believe these are the ingredients in building a plan for clients to live a more meaningful life. But a meaningful death?
Most financial advisors I know with at least a few years of experience have had to process a death certificate to aid in the disposition of a deceased client's assets. I work with my clients' attorneys, CPAs and family members in order to provide holistic advice. But that scramble for information that a family experiences after the passing of a loved one is a confusing process at a time when clarity is needed most. Clients who typically have their estate plan completed well in advance of their death — mine are included in that group — have just as hard a time.
We as an industry need to learn more about the aging process. Our bodies change over time — our hormones change; we lose muscle mass; our brains change. In light of these facts, it becomes obvious that it is more important to live a healthier lifestyle. I am not suggesting incorporating nutrition and personal training into a financial advisory practice.
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But there has been a big push lately to teach personal finance to highschoolers and college kids. How about teaching them about geriatrics? We should all know what to expect from aging, right? Isn't your health tied into your finances just as much, if not more, as your 401(k) contributions? If we are expected to live longer, won't we need to stay in the workforce longer?
If you want to keep it simple, think of it this way: Every single client is aging, no matter what age they are right now. And as you age, your health really is your greatest financial asset.
The first step for me is learning. There are plenty of "death checklists" available online from reputable organizations, such as AARP. I'll be reviewing them. I think of it as my first project for the new year, and a big one, because being a resource is one of my most important professional functions. I want to show the right checklist to the right family at the right time, when the need arises.
This won't make great marketing copy, but I'm confident it will make clients' lives much easier. Offering a holistic practice requires that you delve deeper into this uncomfortable topic. Otherwise it is just a buzzword.
— By Mitch Goldberg, president of investment advisory firm ClientFirst Strategy
