Planners need more understanding of estate planning

Estate planning remains a misunderstood part of the financial planning process, according to Duffy Legal principal Jeremy Duffy, which meant advisers were missing out on lucrative revenue streams.

Speaking at the Self-Managed Super Fund Professionals’ Association of Australia (SPAA) conference in Adelaide this morning, Duffy said financial planners could generate significant revenues from their existing client bases by becoming more engaged with their clients’ estate planning needs.

Duffy challenged the widely held view that estate planning was all about making a will and ensuring that assets were distributed to the people that the client wants them to go to.

“In my view, this approach focuses on only one aspect of estate planning, namely deceased estate planning, and then only on a small aspect of deceased estate planning,” Duffy said. “It ignores the many things that can and should be done to plan better for both life and death.”

Instead, Duffy believed the central goal of all estate planning was to ensure that assets are appropriately managed, in life and death, particularly for times of significant life changes, so as to maximise wealth and minimise succession issues.

However, Duffy cautioned planners to be aware of their risk management obligations when dealing with their client’s estate planning issues.

“It is my view that the law imposes an obligation on you to advise your clients to obtain advice as to the wider range of available estate planning services when it is reasonably obvious that the client requires these services,” he said.

Duffy said that “obligation” meant planners needed to take an holistic approach and seek other professional help – from accountants, lawyers or other advisers – when they did not have the expertise to deal with particular estate planning issues.

This meant planners needed to work more closely with accountants and lawyers in their client’s estate planning requirements. Rather than being a threat, he urged planners to view this as an opportunity to develop mutually beneficial alliances with accountancy and legal practices.

“Believe me, when it comes to referrals and access to your client base, lawyers actually need financial planners more than you probably need them. And that’s something the legal industry is beginning to understand.”