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MDRT INSIGHTS

It’s Never Too Early To Begin Estate Planning

People often avoid conversations associated with mortality, meaning they probably don’t discuss estate plans, and may not be aware of the living benefits they offer. As a result, seniors may lack preparation and plans for their estate, which could make them vulnerable to financial exploitation.

To engage your clients in a truly comprehensive financial planning approach early on, emphasize that unpredictable life events could happen at any moment and leave them incapable of performing simple financial tasks such as paying bills.

Ease Clients Through Loss Of Control

Incapacity associated with aging can be a threat to your client’s financial well-being, and it can be particularly difficult for clients with dementia or Alzheimer’s disease to give up control or recognize that they no longer have the same capacity as in the past. If these clients haven’t established durable power of attorney, an advisor must determine the appropriate next steps to solidify that component of their plan.

Joint meetings between clients and their families can be complex, yet effective in these situations. You cannot anticipate the direction of the meeting, but flexibility and strategic thinking can often lead to the client recognizing that a durable power of attorney needs to be established and enacted.

Most clients think of their will when they hear the term “estate planning,” but creating a plan for when they are no longer able to control their estate is a necessary, often overlooked, component to address.

Establish Appropriate Contacts

Although cognitive deterioration and the inability to manage finances may be clear to you as your clients age, privacy policies limit your options to communicate your clients’ needs to their family members. Financial exploitation of seniors is on the rise, due to the influx of baby boomers nearing retirement. The Financial Industry Regulatory Authority has established new industry regulations that provide guidance and necessary measures to navigate and protect senior clients in these situations. 

FINRA Rule 4512 requires advisors to make an effort to establish a trusted contact person for administration and communication purposes. This added structure aids advisors who have clients facing incapacitation and need to maintain their estate plans. FINRA Rule 2165 enables temporary holds on accounts if there is a reason to believe financial exploitation has occurred with a “specified adult” customer. These regulations address the gray areas to protect your clients as they age, as well as to protect the integrity of their estates.

Establish Checkpoints

Technology encourages the next generation to become involved in estate planning. Many of our current clients’ heirs are tech-savvy and want access to their parents’ finances for peace of mind. Financial planning software that allows each account to have multiple IDs can capture a client’s entire financial picture, including credit cards, checking accounts and more. Your clients can still have a sense of independence while their children can monitor their spending behaviors to ensure they are not being taken advantage of financially.

Leverage Available Resources

The key to sophisticated estate planning is understanding the boundaries of your knowledge and how you can expand your it through industry resources. Mutually beneficial relationships with attorneys whose specializations align with your clients’ needs can be vital to your success. For example, you may refer clients to different attorneys who are best aligned to work with small-business owners, retirees or any number of particular situations that would affect an estate plan.

Conduct thorough interviews so that you can trust your clients are in good hands, ensure attorneys can devote time to your clients and confirm their fees fit into your clients’ financial plans. The attorneys you work with are immensely valuable resources and have a great depth of estate plan knowledge from which you can learn. 

Stay up to date on the intricacies of estate planning at the state and federal levels. Although there are federal regulations that pertain to estate planning, certain states have exceptions that you may not be aware of. Your advice should be tailored to your client’s specific location and individual needs.

It is never too early to begin estate planning with clients. As the industry evolves and your clients age, you must continue to hone your estate-planning knowledge to provide your clients with exceptional, well-rounded service that protects their financial health. A sophisticated approach will set them up for success later in life when their finances can become vulnerable. Overall, your targeted knowledge can help protect your clients’ well-being throughout their lives and potentially lead to a secure financial future for their families.

Jim Wessels, CPA/PFS, CFA, is an investment advisor representative with Vision Financial Group, Des Moines, Iowa. He brings more than two decades of active money management experience to provide daily insights on the markets and help investors find practical applications. Jim is a 2-year MDRT member with two Top of the Table qualifications. He may be contacted at [email protected] .


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