← The Practical Planner
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- [00:00]
A
Foreign. So I think there's no denying the fact that financial advisors are this the center of estate planning. And I think that sounds weird and I don't, I don't want that to come across in like an egotistical way of like advisors the best, and they make sure everybody gets everything done. But research does show that financial advisors are the starting point to pushing people to get their estate planning done. I know I can look at my, you know, 100 plus households I've worked with the last couple years. I would say one of them would have their estate plan done if it wasn't for us. And I think that's just natural, right? It's an expensive process. It takes time to get done. We're talking about mostly morbid things. You know, the average person doesn't really think about their finances very much, let alone what happens when they pass away. And so I think, you know, the reason why we're doing today's episode is I think it's really important for advisors to understand their role in it. And, you know, I don't think there's anybody better to talk about this than Dave. So, Dave, honestly, I think everybody knows your background, but I think it might be helpful to give a little bit of context because you have this interesting blend where you weren't just a practicing estate planning attorney in this last role and you weren't a financial advisor. You were like this middle ground person which I think a lot of big firms have now adopted and hired an estate planning attorney in house. And so I would, I would love to hear about, you know, this from you.
- [01:30]
B
Yeah, it's funny because, you know, I've been on both sides of the fence when it comes to. I was an estate planning attorney in Massachusetts, southern New Hampshire for about eight years, dealing directly with clients, creating their estate plans. Then I moved over to Commonwealth Financial Network, a large broker, dealer, independent ria and was interesting because I went from dealing directly with clients to dealing with financial advisors about their clients about estate planning and giving consultations to answer their questions on estate planning, reviewing documents and giving feedback. And I was really able to see both perspectives really well. And I came to really understand that. Wow. You know, when I was practicing law, I really should have leaned on the financial advisors a lot more and brought them into meetings because they're so critical to the process. You know, I read a statistic earlier that when you look at how many people have a estate plan, the statistics are really low. It's only something like 28% of people. But, but those with Financial advisors are like two or three times more likely to have an estate plan, and they're extremely likely to get an estate plan within the next couple of years. And that's not a coincidence because, you know, the financial advisor is their key consultant, I think, in a lot of areas. And they kind of act as a conduit to all these other professionals. You know, when you meet with the estate planning attorney, typically I would meet with someone for an hour consultation. We then they'd come back a few weeks later with the completed estate planning documents. That wasn't a lot of time to get to understand, you know, their family dynamics, their level of sophistication, to really, really understand their goals and priorities. And I think advisors, with the level of interaction that they have with these clients, how well they know them, they're in a position to give so much more value. And they're probably, you know, sit as their most trusted, the client's most trusted professional that they work with. So they value their advice. So they're someone who, if they say, you know, you should really think about looking into forming an estate plan, the client is likely to take that advice.
- [03:51]
A
I completely agree. And for me, I have a pretty set process on this. Like, I believe everybody I work with needs a financial plan first. And it's funny, like, I'll talk to an estate planning to like, hey, I have this client. Would this be somebody that you're interested in working with? Here's kind of the overall situation. And they're like, yep, sure. I'm like, okay, great. When I finish their financial plan, I'm going to, you know, help connect this and then we'll do a meeting together. And they're always kind of like, oh, wait, why are you waiting till after a financial plan? And I'm like, because estate planning is one of, you know, eight or 10 parts of, you know, a financial plan. It isn't the first one, right? And if you start with just go right into the estate plan, I might not know their situation that well. I might not understand their balance sheet. I might not understand their goals. I'm gonna understand the future of what they wanna go down. And so, you know, I have two households I've been working with that are very, very high net worth. One of them is the, you know, now that we know them really well, the lens they look through is I don't really want to give money to my family. I want to spend all this money that I have. I wanna have life insurance. So over the next five to 10 years, before my kids are old enough that if they need anything, they're covered. And then we have another family who's the exact opposite. They wanna make sure they pay the least amount of estate taxes. They want to give the most to their heirs in charity. And, you know, if I didn't take the time to really get to know them and dig deep into that and all the options, the advice would be very different. And so I think the financial plan always leads the estate plan. And where I think I come into play is one educating the estate planning attorney. Now that I know these people really well, I know what they have going on, what's coming in the future, what their goals are, I can educate the estate planning attorney. So when they sit down the first meeting, we're both looking through the same lens of the same person. Because like you said, you did one meeting and then you do the documents. And I'm guessing the main reason why that was the average person's like, I don't want to pay another $500 an hour just to tell you about personal information about me. Like, I just want to get this in, get this done for, as, you know, cheap as I can. And obviously that's not the right lens for them to look through. But as you start to work with people, you realize that that's what I have to do when I charge an hourly rate, which, you know, is still the vast majority of estate planning attorneys. There's nothing wrong with that, But I think for me, get to know them, educate the estate planning attorney, Educate the client as well. I think the more that they know coming into that meeting, the better. Right. Here's why you might want a revocable trust versus not. Here's what some of these other tools like slats and eyelets and gratz and all these other tools can do. So, so when they come into the estate planning attorney, I can tell them obviously what I know about them. Here's some of the tools that we've got out. Here's the ones that we know that don't fit them. Here's the ones we know that they don't want. Here's kind of the last number of them. And so then when they sit down with the estate planning attorney, it's not the first time they've heard about all of these advanced structures and trusts and reason they're coming in. And now they're refining their knowledge and able to better make a decision because of where they're at. Just on the education side of things.
- [06:48]
B
Exactly, absolutely. And you know, I know, you know, back when I was at Commonwealth, it would happen all the time that a client would go see an attorney outside of the advisor's purview, have documents drafted, and then we'd get the documents submitted in and we'd see that, you know, there were some serious flaws in them. And a lot of times it's because the attorney sometimes is hesitant to work with a financial advisor for whatever reason, they don't bring them into the process appropriately. And there are just so many areas where the, the financial advisor has so much context, so much knowledge that would be beneficial for everyone. And the other thing is the financial advisor is, is essential even to the implementation of the plan because once you form that plan and it gets into place, you've got to fund that trust. Now if they have investment accounts and life insurance, all other things, a lot of times you're going to be coordinating with that financial advisor to get those assets into the trust. So I think that estate planning is an area. It seems like it's trending, like advisors are getting into it more and more, but I think it's just so critical that they talk about it because, you know, I see estate planning as having three, three kind of points in a life cycle. There's the strategy, the implementation, and then the funding. The advisor can be critical to the strategy and the funding. When it comes to implementation, you know, we've got UPL laws and everything else that advisors want to be careful that they're not going to be stepping over the line. That's why, you know, they refer obviously something like wealth.com or out to an attorney to actually generate the documents. But there's just so many areas that advisor can step in because, you know, we call it estate planning because it's a full comprehensive plan that involves all kinds of different accounts, family dynamics. It's not just the underlying documents that we're talking about.
- [08:52]
A
Yeah, I think, you know, there's a lot there and I think the other part, maybe the fourth part, is like maintenance and pushing them to make changes. Right. I think if we know 28% of people have an estate plan, I, I'm sure of that. 28%, a very small percentage actually update it when life changes come. And so I think we can help push it of like, oh, you did move states or oh, you, you did have another child or oh, you bought a property in another state. Like, you know, maybe you don't necessarily need new documents, but you might need to make sure that those all get funded in the right way. But I think as you went through there you made a lot of really good points. And I think there's a lot of challenges in the estate planning side of things. And one rule that I have with all my clients is that if your professional will not communicate with us on a team, you either have to replace them or we just can't work with you, because at the end of the day, we can't do our best work unless all of us are on the same team and on the same page. So I am very comfortable working with any professional as long as they're qualified and know what they're doing. But if they're not going to get an email back, they won't hop on a call with us as all of a team, then it's. It's not the right professional for you. And I think that's what people want.
- [09:57]
B
Right?
- [09:57]
A
Like, at least as me, when people come on, they say, I just feel like everybody is working in different situations. Like, nobody's being proactive. They're all doing different things. I want to just everybody be around me helping push us forward. And if they're not, all it does is make the client's life hard. Right. I relay to them, they relay to the estate planning attorney, estate planning attorney relays to them, they relay back to me. And they don't even really know necessarily what's being said. So if it's not an email, they're just relaying a conversation to you, and they might not know at all what they're talking about.
- [10:27]
B
Right.
- [10:27]
A
And so now you have this. You're like, what? Why would you do that? And actually they're remembering a different word. That's something that they're potentially not even doing.
- [10:35]
B
Right? Yeah. And, you know, I think it works both ways, too. Like, you know, I think it's really important that advisors, because I used to see this all the time when I was practicing. Funding a trust can be annoying, right? You're. It's, you're not making any money off that necessarily. Changing beneficiary designations, following all these directions. So sometimes, you know, you might not be super motivated to be incredibly helpful in that area, but if you're not being helpful to the client in that area, it's gonna get back to the attorney, and the attorney's not gonna have kind things to say. So it's just, it's just so critical that ideally, you know, there's a relationship there, an ongoing relationship that spans across clients. If we're talking about attorneys and advisors, but to the extent that they aren't, you know, each professional should know who the other professional is and at least have a conversation.
- [11:30]
A
Yeah, totally. And I think, you know, one practical pointer that I have and one thing that I've tried to do is I've tried to build relationships with a few key professionals, right. So like I have a couple like two to three tax professionals that really service the market that I normally work with, that can work with people all across the country. So they know what I look for, they know the things that we think about. I can call them and we can talk through a bunch of different client cases. Like that makes your life so much easier when you have a great point of contact. I think in estate planning that's a lot harder, obviously, right. Because people are state specific. Luckily, I found some attorneys who like, they can do the strategy and they can partner with somebody else in their firm in a different state to make sure it all gets done. But you know, if you're an advisor and you're like, I live in Illinois and I work with clients in Illinois, just find two to three estate planning attorneys that have different maybe specialties and services and costs that you can put your clients with. Because that's just going to make everybody's life easier when they know what you look for, think with, you know, think about and the type of clients you have and that, you know that you can reach out to them and they're going to be available to talk through and help plan for that client.
- [12:36]
B
Absolutely, yeah, 100%.
- [12:38]
A
So, you know, what other roles you think that the advisor has in the estate planning process?
- [12:45]
B
I think it's such a huge value add if the advisor can train themselves up on how to read a trust, how to read a will, what to look for, you know, what are some problem areas because it's in, you know, you know, like if you have someone on staff that's a planner, you have an attorney or someone, a COI that you can refer out to to have documents reviewed. Obviously a wealth, you know, you can use the extraction tool, things of that.
- [13:17]
A
I mean, we, we don't plug well very much. Everybody listens, knows we don't. But like to be able to put an estate planning document in that 60 to 100 pages and just go through the key summary. Saves a lot of time. And it actually is the reason why you read them. Like, I know the average firm is not actually reading all the estate planning documents. They're like, here's maybe a couple key parts, like, is that what you want? This allows you to do it, review it and show a summary and say, is this what you guys want it to be or are there changes that need to be made? Like that is a huge time saver.
- [13:46]
B
Huge. And, and it's a huge value to the client because number one, they can't read these documents. Usually it's all legalese. So it can get broken down into easily readable format that people can understand. And the other thing is a lot of people times when people get their estate plan done is kind of set it and forget it. Like I feel great, you know, we got our estate plan done, you know, 10 years passes, 15 years pass. A lot of times the transaction is done with the estate planning attorney. They're not necessarily following up with them very often. Some are. So the advisor really stands in a role to really be able to identify gaps or when there's changes in the law that might affect the person, they'll know usually if the client is going through some kind of life event, whether it be a death, a divorce, a marriage of a child. Yeah, yeah, so, so they'll know those key points when they say, you know, let's look at your estate plan and see if it still works. And if the advisor either has the ability to review the trust or has a tool or someone to go to that can give some good feedback. That's an incredible value add.
- [15:00]
A
Yeah, I think that's, I think that's a really good point. I think, you know, Obviously this is buywealth.com I think one thing for us to now talk about is like, so that's the in person side of things, right? We're helping plug in the in person side of things. What about if we're using a tool like wealth, like what is the advisor's role there?
- [15:18]
B
Well, I think, I think mostly the advisor's role, it's similar to, you know, when they refer out to an attorney to have documents drafted, really the advisor is going to identify that there's a need, talk about goals and priorities with the client and then, you know, try to not step over the line into recommendations and they can refer them over to wealth.com to go through the process of making their own decisions to form their own estate plan. And then the advisor can help them get it signed and then help them get it funded. And they can have a really quick process, end to end, to get an estate plan in place. And it's a process where the advisor has a way to refer the client to this place where they can get their documents done on their own. And the advisor isn't going to get themselves into trouble by stepping Too deeply into the estate planning process.
- [16:14]
A
Yeah, I think that's an important part. Right. Like you're not giving the advice, but it is even more important to be knowledgeable and educate them in this side of things. Right. Because they're going to be guided through something. Like what I talk about with clients is, you know, wills versus trust. We talk about irrevocable versus joint. We talk about like some of the key people and provisions that are inside of that, how to think about it. But the thing that I do with every client, I don't know if you know, as many people do this with wealth, is not, as I coach everybody to still hire an attorney through wealth. My thought is if you can go through and do all of this and then you can just hire somebody to go through it with you and make sure you pick the right people, you pick the right things, you made the right decisions. I think that's really important for just that main reason. The other reason is every client that I have, you know, I wouldn't say every. Most clients end up, you know, having to set up a trust. Right. And when you set up a trust, what do you need? You need to move the deed of your house. You know, there's obviously other funding potentially because there were a lot of business owners. The business a lot of times gets fund, you know, put into the trust. You're not going to do that yourself. Right. You need an attorney to do it. So now you pay them, you know, a very low fee to review this and talk about it with you. And then you pay them a fee to move and change those documents. And I think when you go through a software, sometimes people are like, you know, did I get everything right? Obviously there was videos and prompts and all of these to help educate you. But it's nice to be able to talk somebody at the end and be like, did I do this right? Should I make any changes? You know, now you have a person that you get to know who can help you do that. And then in the future, as you know, you have to do different document changes and things like that, you do still have an in person attorney that can help you do all those things that are needed down the line.
- [17:52]
B
Yeah. And that's why it was so critical that we have the attorney network there that's available to be referred out to that are familiar with the product, they're familiar with the documents so that they can be helpful. And like you were saying, you know, almost always you're going to need an attorney anyways because if you have A house that's going into the trust, you're going to need someone to repair that deed for you. So, you know, it can be a good idea to talk to them because the idea behind the platform is not to replace attorneys. Attorneys are still essential. These documents, you know, the getting in place are, you know, the revocable trust and the wills, powers of attorney, healthcare documents. There's still a world of things out there, and I'm an attorney myself, a world of things out there where there's a level of complexity that is going to need an attorney to either look at or to put together. If we're talking about like a spousal lifetime access trust or a grat, you know, some of the more sophisticated planning tools, or, you know, let's say a child has special needs, you know, the platform is even going to direct them. You should probably talk to an attorney about this because you've got some complex unique needs that you want to make sure that you're going in the right path. So it's a good idea to talk to an attorney.
- [19:08]
A
Yeah, I think it's really important to know the lane that it makes sense in the lane that it doesn't. And so, like, if you're an advisor using a platform, you do need to know, hey, you might be right for this, you might not be right for this. And there's clients who like their situation might be right for it, but them in their mindset and you know, how much fear they have around not using directly to a person might push them for it to not make sense. But I think, you know, we've seen all the statistics. I mean, Samantha Russell, who's on the advisor Council of Wealth, she posts all the time about, like, what people, what people actually want from their advisor. And tax planning and estate planning are two of the most popular ones. And I think a lot of people think that in the advisory world, we're actually seeing fee compression. But what I think is we're actually not seeing fee compression and we're seeing, you know, a role that is expanding and people want more out of their advisor. And so the way to be able to charge good fees and honestly do good work is to basically be this, like hybrid or, you know, hybrid family office where you are touching every area of money. And I think if you're the advisor that is not going down that lane in the future, you're gonna end up losing clients to advisors that are charging the same fee as you. But they're doing a lot more than throwing them in just some asset allocation model.
- [20:19]
B
Absolutely agree.
- [20:21]
A
So I think we hit on everything, you know, in this episode that we needed to. But I think at the end of the day, the number one role of the advisor is education and pushing, pushing people to get their estate planning done. I don't think you can say that you're doing a good job as an advisor if your clients don't have an estate plan, because your financial plan is not only what you're doing and planning while you're alive, but it's also planning beyond that. So I think this is your push to go do it. Whether you only use in person, whether you use a digital state planning tool like wealth or a hybrid of the two, you need to make sure you're helping your clients on this to be a fiduciary. So, as always, everybody, we really appreciate you listening. You know, we're putting a lot of effort into this podcast and we have great people like Dave willing to hop on with this. We miss Anne. She's going to be back with all of us, you know, coming in the future. But please rate and subscribe and help us keep this podcast going, and we'll see you in a couple weeks.