A financial advisor's role has evolved beyond only managing money. The truth is you provide a lot more - almost like a life coach with a focus on finances. Your clients’ assets might be the primary focus, but there’s still a level of humanity that allows you to form a deeper understanding beyond the numbers.
But how far should you go when broaching a topic outside of you expertise? You can actually go a lot further than you think. Mainly because you’re not offering advice; you’re offering guidance.
Families are complicated and it can be difficult to discuss these topics. These conversations tend to become more emotional than practical, which is where you can intervene. You’re someone they trust and respect on a professional level so think of yourself as an impartial resource who doesn’t have as much to gain as many assume. Here are four topics to consider:
How You Can Make An Impact: Only 26% of Americans currently have an Advance Directive, which is the combination of a Living Will and naming a Healthcare Proxy, according to the Journal of Preventive Medicine.
You don’t have to be a medical professional to help your clients get these vital planning documents in place. All you have to do is provide the documents and explain the value: An Advance Directive allows your family to make the decisions you want in case of an emergency. The goal is to prevent treatments the patient believes are unnecessary, and provide clarity at a very emotional time. If your client doesn’t have an Advance Directive it can tear a family apart and lead to court battles between family members forced to take sides on what your client would have wanted.
How You Can Make An Impact: GoBankingRates conducted a survey to find out how much money Americans have saved for retirement. 33% have no retirement savings and 23% have less than $10,000.
You’re already preparing your clients for retirement, but have you gotten into the details of how they will live in their golden years? Specially, where your client wishes to live if their physical or mental faculties begin to deteriorate and who will assist them in these big decisions. Relying solely on private or government-based health insurance to cover these costs isn’t the wisest choice, so tough decisions will need to be made.
Do they have the funds to age-in-place, transforming their current residency into a place that can accomodate special needs? Do they have the means to live in an assisted facility or nursing home of their choosing (many of which cost thousands per month)? Will a family member be able to take and care for them?
These aren’t easy things to think about so it’s best to plan now when there are choices to consider. You’re in a position to help them understand their options, figure out the financial details, and make their eldercare wishes a reality.
How You Can Make An Impact: You already know the “Great Wealth Transfer” is almost upon us, where over $40 trillion in assets is expected to change hands from baby boomers to Gen X to millennials over the next 30 years.
The question for your clients: Who gets what?
This could be very straightforward if your client has a spouse who’ll get everything or will divide their estate evenly among their children. But what if your client wants to leave the bulk of their estate to a charitable cause or organization? Will this cause irreparable rifts in the family? It might, which is why they should do their best to let their family understand why they chose to do this.
On a more selfish note, this also means that the money in their estate will no longer be under your control. If the money is set to leave then you can prepare to take the AUM hit.
How You Can Make An Impact: The average funeral costs between $7,000-$10,000, and that’s a modest estimation. Just like a wedding, costs can pile up out of nowhere, costing an actual fortune when all is said and done.
This is where your focus on the numbers can really pay off because where is this money coming from? Have your clients made arrangements to pay in advance? Do they expect their family to cover the cost? Even if the money will be reimbursed from the estate at a later time, someone might be forced to contribute the money upfront.
Also, does your client even want a funeral? Do they want direct cremation and their ashes scattered at sea? These are the important details you can help them clarify and put into their Everplan so their family is fully aware of what they want.
These points all have a heavy emotional component and each one can create a lot of family turmoil if planning isn’t in place. That’s where you come in: to make sure the details are covered and to help guide the planning around these fears.
How many of your clients want to have a difficult conversation with a loved one but don’t know how to get it started? How many wait until it’s too late and then their family is left to pick up the pieces at a time when they should be grieving?
This might not be why you became a financial professional to begin with, but times (and job duties) change. You don’t have to pretend to be something you're not, but with all your experience and wisdom it’s time to take your practice to places it’s never been before.