Estate planning key to adviser sustainability
By putting estate planning at the heart of their business, planners can ensure the long-term sustainability of their client base while also fully satisfying the requirements of the Future of Financial Advice (FOFA) reforms.
According to Halcyon Wealth Advisers financial planner Phil Clinton, estate planning is about looking after the financial wellbeing of one's clients by taking their entire family situation into account.
Estate planning ticks all the boxes around 'know your client', Clinton said - adding that "FOFA's going to shove [estate planning] down our throats".
Rather than simply sending clients off to see a solicitor so they can get a will drawn up, planners should position themselves at the "hub" of their clients' financial wellbeing and then call in other experts as required, he said.
"Generally, I arrange for the solicitor to come to my office and meet with the clients. And, with the client's permission, I have briefed the solicitor before they get there on what the problems and issues are," Clinton said.
Because he has a detailed knowledge of his clients' family circumstances, Clinton can also limit the solicitor's brief and keep his clients' legal fees to a minimum.
According to Branton Mannix Consulting principal, Damian Hartley, planners who adopt an estate planning business model can also ensure the future health of their client base.
"I've worked with practices whose youngest client would be 65, and they might have 300 clients ranging up to 75," he said.
But if planners focus on intergenerational wealth transfer and estate planning, they can build relationships with the children of their clients.
"The family wealth management model is all about getting to the next generation. Quite often, planners don't understand how to do that, or they think their clients will be annoyed at them for doing it," Hartley said.
But if the planner puts the conversation in the right context, the client will be grateful that their child's wealth is being looked after, he said.
Clinton adds that planners can also form relationships with the parents and grandparents of clients.
Business and estate lawyer Michael Perkins currently teaches an undergraduate estate planning course at the University of Technology, Sydney.
He points out that estate planning is a core competency of the worldwide Chartered Financial Planner competency framework.
"Government and public policy is really clear that financial planners are meant to move to the professional end of the service spectrum," Perkins said.
Financial planners should be including estate planning situation reviews in their service mix and engaging with the values of the client - not just the money of the client, he said.
"We're there to help clients with wealth preservation and transfer - and that really is the subject matter of estate planning," Perkins said.
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