 |
(June 24, 2003) In a packed estate planning seminar at the 2003 Million Dollar Round Table meeting in Las Vegas, a show of hands revealed that more than half of the 800 or so attendees considered client avoidance of and discomfort with estate planning one of their biggest challenges. The same audience was hushed when presenters Jon Gallo, an estate planner, and wife Eileen Gallo, a psychologist, said that advisors themselves cause clients to be uncomfortable about the topic. But understanding a three-dimensional money-relationship model can help you personalize your estate planning strategies.
“Usually, where does the estate planning discussion start?” asked Jon Gallo, a 37-year veteran insurance advisor from California. “First you talk about disability planning and the clients’ incapacity to work, you discuss estate taxes and what will happen on the deaths of each spouse, then you ask your clients what would happen if their children predeceased them? If the clients own a business, you talk about retirement and the sale of the business. All of these topics are covered in the first meeting and naturally overwhelm some clients.”
The emphasis on the technical aspects of estate planning is the biggest roadblock to family financial planning, the couple explained. According to the Holmes-Rahe Social Readjustment Scale, the death of child and the death of a spouse are the top two stressors — yet financial advisors choose to start their estate planning talks with these two points time after time, Eileen noted.
“Some of you who do estate planning so much may be desensitized to these stressors but you have to rethink the way you talk about this with clients,” she said, explaining that for some clients, the life review process inherent in the estate planning process is simply too uncomfortable and prevents them from proceeding.
To overcome estate planning obstacles, the Gallos’ reommended that advisors let the personal issues outweigh the technical ones, come across in a non-threatening way, have more in-person contact and master active and patient listening.
In addition, knowing your clients’ money personality can help you create a plan for tackling sensitive estate planning issues. Jon explained that people have multifaceted relationships with money and that each person develops a unique relationship with money in three separate dimensions: acquisition, use and management.
Acquisition deals with how your client gets money. For example, if your client is a successful entrepreneur whose life goal is creating and selling new business, acquisition is likely more important. Encourage such clients to think in terms of the family’s consolidated financial statement, Jon suggested. Is it important that increases in net worth from newly acquired business be reflected on their balance sheet or a consolidated financial statement? This question can lead to techniques to divert future wealth to younger generations through partnerships.
Use describes how your client saves or spends. At one end is the spendthrift and at the other is the compulsive over-spender. This type of client is likely to respond positively to savings plan ideas such as a grantor retained income trust [Editor note: U.S. example, may not be exact Canadian equivalent].
Management is simply how your client manages money. Is your client a micromanager when it comes to his portfolio’s performance? Or does he miss bill payments because he is so disorganized? These clients are likely to be interested in retained management ideas like family limited partnerships [Editor note: U.S. example, may not be exact Canadian equivalent].
• • •
Filed by Sheila Avari, Advisor’s Edge, savari@rmpublishing.com.
(06/24/03)