A new survey of client-facing advisors explores estate-planning challenges and recommendations
Estate planning presents a myriad of challenges for clients, which is why they need specialists like advisors to step in. But even though they know the vagaries and brass tacks of planning, estate-planning advisors still face their fair share of difficulties.
In a recently unveiled poll of nearly 130 client-facing advisors, US-based wealth management firm Key Private Bank found that 77% considered navigating interfamily dynamics as the hardest part of estate planning.
As if that wasn’t tough enough, another 57% said that convincing clients to communicate wishes openly and honestly with family members is a challenge. And for 34%, the mere act of convincing clients to establish an estate plan is difficult.
It can be hard, especially for an outsider, to enter the picture and prompt action. But it’s necessary, especially if they want to help clients avoid critical estate-planning pitfalls. When asked to name their clients’ biggest mistakes, 43% cited having no plan at all, followed by not updating documents regularly (35%). Another common error is the belief that a will can oversee the distribution of their assets (35%).
And when it came to the catalyzing events behind estate-planning conversations, advisors played the biggest role, with 29% saying they had to raise the topic themselves. Life-alternating events like accidents or health crises were cited by another 25%. But overall, advisors agreed that clients should start planning earlier than they may think.
“Some clients may be hesitant to have a conversation about estate planning with their family members because they fear that sharing their wishes will cause conflict,” said Andrea Griffiths, J.D., CWS national manager Trust Settlement Administration at Key Private Bank.
“In designing an estate plan, clients must sort through a number of emotional and psychological issues, ranging from treatment of children—where what's fair is not always what's equal—to the beneficiaries' perception of their relationship with the grantor, as well as their behaviors and potential biases toward other beneficiaries," Griffiths added.
Not surprisingly, clients are finding those emotions, issues, and biases hard to lay bare. More than eight in 10 advisors (81%) said only “some” or “hardly any” clients are having open conversations about estate plans and wishes with their families. The result, as observed and reported by nearly four in 10 (39%), is that fewer than half of estate plans holistically capture their clients’ values in transferring wealth to the next generation.
“The sensitivities of talking about estate planning often presents emotional hurdles to putting a plan in place—especially when multiple marriages and blended families are involved,” said Karen Arth, head of trust with Key Private Bank.
"To navigate these complexities, we encourage our clients to take a proactive approach to estate planning by talking through their wishes and desires early on with family members to set expectations, delegate responsibilities and avoid misunderstandings later on."