Hot topic: Should you become your clients’ estate planning expert?

The baby boomers have had an impact on Canadian society ever since they came kicking and screaming into the world between the years 1946 and 1964. They fuelled a boom in suburbs, schools and shopping malls in their youth, a burgeoning home buyers’ market in their adulthood, and a focus on retirement planning as they reach their golden years. In fact, Canadians approaching retirement now make up the fastest-growing demographic in the country.

Given that all of us must die at some point, the next big boom fuelled by the baby boomers may well be for estate planning services. Most advisors agree that providing such services is crucial to presenting a strong value-added proposition for clients. But how to do so?

Do advisors need to become specialists in integrated estate planning as the baby boom generation moves into retirement and starts thinking about their legacy? Or is it better to delegate to a strong network that includes lawyers and accountants?

Greg Snider, CFP, EPC Assante Financial Management Ltd.

Everyone who professes to be a wealth manager should be getting ongoing training in estate planning.

Wealth management is a complex assembly of various aspects of a family’s financial affairs, and integrating estate planning allows us to address one more need—namely, the desire of families to imprint their values and long-term goals on their legacy planning.

For example, most of my clients are quite affluent, so one of the biggest areas of concern for them is, “What happens if I die and pass on a large amount of capital to my children?” If those children are too young, there’s a risk that inheriting a substantial sum of money all at once will harm them more than help them.

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Another issue I see often: with so many marriages on the rocks today, clients are concerned about their money moving along bloodlines, rather than being dispersed to ex-husbands and wives through marital break-ups.

The problem is, unless they specialize in estate planning, most lawyers create oversimplified estate planning documents that don’t address the issues facing families. They tend to view will creation as a zero-sum game. And those lawyers who do specialize in estate planning sometimes charge more than the customer is willing to pay.

We handle that in our practice by having an in-house team of lawyers and accountants within the Wealth Planning Group at United Financial, a division of our sister company CI Private Counsel LP. They specialize in creating wealth and estate plans for our clientele. The creation of estate planning documents is covered under the management fees our clients pay. We use a three-stage process that includes:

• Helping clients identify their values and what is important to them, so that we can compile a “shopping list” of items to be included in the basic design.
• Running that by the wealth planning team, which includes accountants and tax specialists who can point out the tax implications and give us opinions and recommendations on what we’ve asked for.
• Submitting that, along with the basic design that the client has chosen, to their lawyers to facilitate the process of putting them into legal documents. The result is that we reduce the amount of time clients spend in front of lawyers.

I don’t expect to be as knowledgeable as the expert lawyers and accountants that I work with in these matters. But, by the same token, those lawyers and accountants don’t have the intimate knowledge of the client that comes with working with them on an ongoing basis.

I see my role as that of a coordinator in this process, bringing together the expertise of different professions to ensure that the final plan effectively incorporates each family’s values and concerns. That means I have to have a good working knowledge of what can and can’t be done.

I’m constantly completing courses similar to those available through Advocis, such as Estate Planning and Wealth Management, Advanced Taxation and Applied Estate Planning, as well as Assante’s educational seminars led by specialists in taxation, law and estate planning. We also have conferences within our corporation and outside of it that focus on high-net-worth issues and estate planning. In my opinion, providing this kind of integrated approach to estate planning gives our firm a competitive advantage.

Diane McCurdy, CFP McCurdy Financial Planning

I tend to refer clients (who don’t have their own accountants or lawyers) to a few of the professionals I know and trust. I think if you’re going to refer your clients to a lawyer or accountant, you really need to meet with that person, or at least talk to them on the phone.

I ask lawyers and accountants that I’m considering for referral questions such as: What kind of client are you looking for? What are your fees? And how long does it usually take you to produce a will or set up an estate freeze? After all, referring a client to a lawyer who has inflated fees is a great way to lose him.

Proximity is also part of the decision—Vancouver is a big city and I try to find professionals who aren’t a long way from where the client lives or works. I have lawyers and accountants in my building, so I sometimes refer them because it can be convenient for the client.

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Although I recognize the need for expert help from lawyers and accountants for certain aspects of estate planning, I believe you need to have a general working knowledge of the field, so you can spot issues that your client should talk to an accountant or lawyer about.

For example, U.S./Canada cross-border issues can be very serious when it comes to estate planning. I’m not an expert in that area, but I know there are potential land mines, so if I have a client with a second home in the U.S. I might refer her to an accountant to discuss the tax implications.

I also like to be kept in the loop after I’ve referred a client to an accountant or a lawyer. If clients would like to have me copied on communications with other professionals, I ask that they make the request to the accountant or lawyer themselves, so that permission is given directly.

Sometimes clients prefer to pass on information to me themselves, or they ask that I follow up with them. That way, I can act as a second pair of eyes. Lawyers and accountants can miss things, and they may not be as familiar with the client as I am.

I had one client, for instance, who put his house in joint names with his son, with the stipulation that his second wife would have a life interest in the property (meaning she would be able to live there until she died). After that, the son could sell the property or occupy it as he wished.

But my client’s will didn’t clearly state who would pay the expenses on the home while the second wife was alive. That meant by default, the son would have to pay the bills (as the owner of the home). If the wife let the expenses get out of whack, I feared that could lead to bad blood. I suggested that my client ask the lawyer about this issue and he agreed that it was better to be specific.

In my experience, clients sometimes need a push before they bite the bullet and consult a professional. I see my role as one of encouraging and perhaps even nudging them to do what they need to do.

I start by giving them compelling reasons why they need a will, for example. If they don’t follow through, I sometimes make them write a checklist in their own handwriting that lists the things they’ve agreed to do. Then we photocopy it, so when I open my file it’s always the top page.

The next time they come back in, they recognize their hand-writing and say, “Oh, I know—I didn’t get to that.” I’ll say, “Okay, can you promise me that you’re going to book this? Let’s set a date for you to have this done. When should I call you to follow up?”

Even with long-term clients, at every meeting, I ask them what has changed in their life since I last saw them. If they’ve gotten married again, they may not have changed the beneficiary on their investments. They could end up leaving money to someone they can’t stand any more. If I let that kind of thing happen, I feel I’m not doing my job as a financial advisor.