At this time of the year, gift giving is top-of-mind for many of us. Gifts are a way to show friends, family, and colleagues that we appreciate them. As a financial planner, you are in the privileged position of being able to give your clients a gift that no one will ever want to return or exchange: peace of mind.
According to a survey by the TIAA Institute, almost half of respondents (42 percent) reported feeling their mental health negatively impacted because of financial stress. Financial planning generally—and estate planning specifically—can create angst in just about anyone. Even if we have more financial resources we’ll ever need, there may be a nagging feeling of losing it all, or concern about whether the people and causes your client cares about will benefit. It’s important to understand not only how much money your clients have, but also the stories behind what it means to them. In Your Client’s Story, I explore how to dig below the surface to uncover those stories. You can also learn more by revisiting some of my previous articles, including What’s Going On In Your Conversations?.
As you and your clients think about planning for the next year (and beyond), remember that helping your clients create a lasting legacy is one of the greatest gifts you can give them. It’s something they’ll treasure and remember much more than a coffee mug or calendar.
According to famed psychologist Erick Erikson, the hallmark of successful late-life development is the capacity to be generative—passing on to future generations what you have learned from previous work and involvement. Erickson encapsulated this belief in the phrase, “I am what survives of me.” This phrase perfectly describes what it means to leave a meaningful legacy—you’re leaving not only financial resources, but also the stories behind those numbers.
While “legacy” is often thought of in terms of a financial inheritance, it is much more than that. A legacy can be designed to honor your client’s objectives to help future generations. Leaving a legacy can also mean passing down values and family histories, and serve as a role model for success and fulfillment in future generations.
These issues are also a critical part of estate and legacy planning, and can be part of what I refer to as a “benevolence plan”. Think of a “benevolence plan” as the counterweight to a “financial plan”—both are needed for balance. To get the conversation going, you might say something like:
For many folks an important facet of a comprehensive financial plan is deciding how to invest charitably in your community, place of worship, school, or specific causes you feel strongly about. As your advisor, I would like to get a sense of the types of causes you want to support, and talk about how to leave a financial legacy that can help those causes. This could involve setting up a charitable or scholarship fund, including specific charities in your estate planning, or setting up an automated giving program for someone or some cause.
To help your clients focus even more, ask them to consider that following questions:
- What charities or causes do you invest your time and energy in supporting?
- What charities or causes do you currently contribute toward?
- What charities or causes would you like to invest in financially?
- Are there causes that you would like to support on an annual and/or perpetual basis?
- Are there any family members for whom you would like to develop an ongoing income stream—college fund for children or grandchildren, help with parents, funding for a disabled child or sibling?
For some people, developing a “benevolence plan” for leaving a financial legacy is as important as managing their investments. Many people feel a sense of stewardship regarding the wealth they possess. As one client explained to his advisor, “This money is just passing through my hands. I’m the conduit, not the possessor, but I have a responsibility to make sure it flows in the right direction.”
