President's Letter - Difficult Conversations


If a financial advisor is going to provide holistic financial advice, there will be times when it is necessary to force clients to discuss difficult issues. One of the toughest conversations is planning for the end of life. By “end of life”, I am not referring to an estate plan, but rather some of the nitty-gritty documents that will protect the individual and his/her family when the end is near. 

Spectrem recently completed in-depth research with investors regarding end-of-life planning and found that there is a large disconnect between how prepared investors feel they are for their final days and the actual steps they have completed. In fact, 86 percent of investors feel they are somewhat prepared for the financial aspects of passing away and the distribution of their assets.

While many investors have created a will, only a few have completed many of the more administrative tasks such as making a list of all of their accounts (56%) and providing access to others to all of their accounts (46%).  Only 42% have made a list of non-investment assets.  And for the most part, discussing some of these items with family is even less common.

Legal steps are more likely to have been completed yet still provide lackluster results.  While more than half of investors indicate they have a will (61%), fewer than half have a financial power of attorney(46%) or a medical power of attorney (47%).  Only 32% have a trust (many claim they do not need one) and only about two-thirds have identified beneficiaries for their accounts.  

Many investors are unfamiliar with some of the legal tools identified above. Additionally, for many, there is a bit of discomfort around potentially turning over control of your finances to a loved one. The problem is that many times it becomes “too late” if these issues are not addressed ahead of time. Therefore, it is important to push customers into making these types of decisions. Additionally, it allows the financial advisor to potentially be introduced to family members, thus making it easier to develop communication if needed at a later date.

Check out our new report Down to the Last Detail. This research will provide financial advisors with checklists and ideas on how to approach investors regarding these touchy topics.