You may not be aware of it, but research demonstrates that most boomer clients value personal and family legacies more than their financial inheritance. Introducing legacy planning into your practice is a great way of differentiating your service and proving enduring value to your clients, especially in these challenging times.
Legacy must be viewed in its broadest context; as a combination of values and accomplishments, wishes and instructions, together with heirlooms and memorabilia and finally financial assets.
With all the current focus on lost equity and portfolio performance, it might just be the perfect time to stand out and be different, to show clients it's not just about the money. A legacy discussion with your clients demonstrates you truly provide a life advisory role, not just the financial management piece.
A groundbreaking survey of 2,600 boomers and their parents by Allianz North American Life Insurance Company found that 39 percent of elders thought it was important to leave a financial inheritance, but just 10 percent of the boomers found it important. Furthermore, nearly 80 percent of the boomers thought passing on family values and life lessons was vital.
Opening up legacy discussions is also a great way to bridge communication gaps between generations. With nearly 44 percent of boomers responsible for aging parents, this is an area of immediate concern. For example, many boomers still have living parents who were part of the "Greatest Generation." Their memories and stories surrounding World War II will soon be lost to posterity if they're not recorded and catalogued.
This so-called "legacy" gap between wishes and action creates an opportunity for advisors to show their worth and improve relationships with not only the immediate client, but with other generations of the family as well. If you help the family build a legacy, it is the perfect way to add value to their lives and uncover expanded product and service sales opportunities in the process.
The first step: Create a starting point
Done correctly, legacy planning does take an investment in your time, so you'll want to start by focusing your attention on your most profitable clients (those individuals with high net worth). Over time, this should become an integral part of your estate planning services to these valuable clients.
After you've determined your list of profitable and high-net-worth clients, identify which of these estates will be most problematic if your client were to die today. Remember, the settlement process can be a real drain on an advisor's time, so thinking of your clients' current level of preparedness will be of help not only to them, but also to you.
Last, but not least, identify the obvious. A January 2009 study in Financial Planning magazine reported that 81 percent of investors were going to leave their advisors. Which of these clients are at the highest risk of leaving your practice?
From this filtering exercise, you should now have one priority list. You can now focus your legacy efforts on these key clients.
The second step: Create an opportunity
Most advisors want to be multigenerational, but often lack the right starting point. Legacy discussions are a great way to get the process underway. I suggest beginning with a client-appreciation event.
Consider hiring a personal historian to give an interactive legacy workshop for 10 of your priority list clients. Invite both the client and their parents or children. Have the historian take the group through a legacy interview -- a series of questions that will get the elders in the family talking with the other family members. Conversations could cover family milestones or accomplishments, key family events, or even the advice, values or life lessons of the elder. For more information on personal historians in your area, go to the Association of Personal Historians Web site.
Appoint one person in each family group as the scribe and ask to them take notes. Chart an outline of important legacy-related topics they want to address going forward. As a special touch, consider providing each family group with a nice, quality journal at the outset of the meeting to document their findings and add to over time.
Follow up with both the clients and their parents/children and schedule meetings at your office. Now the advisor is positioned, through shared experience, to counsel the client through the legacy process, including the more delicate points of what will happen at the time of wealth transfer, and how to best organize and prepare today. Regardless of how you choose to calendar these topics, the point is to showcase your talent for delivering on the unexpected, and bringing the appropriate resources to bear at all points in the process.
The third step: Ongoing activities for the advisor
Think of other ideas for your 12-month legacy calendar, and make full use of your regular client newsletter. This is important because it allows you to address those clients on the priority list as well as your entire client base. Write a personal editorial about why you believe legacy is important. Enlist your personal historian to co-author an article with you on how to break the ice between generations.
This is an effective and easy way to demonstrate to your clients that you understand that the nature of their wealth goes beyond finances -- including the biographical assets of the family.
As you go through this process, you'll undoubtedly learn a lot about legacy and what resources and tools are out there for your clients to try. Consider writing a special printed letter that goes to all of your clients introducing them to some varying resources, like your local personal historian that you've discovered and found to be valuable. As a result of this exercise, you'll also get a much deeper understanding of the family and its dynamics, putting you in a better position to provide advice and counsel.
Realize this -- given the economy, the time to do this is now. The Allianz study showed that when it comes down to advisors, both elders and boomer children value personality traits more than they do financial knowledge. Helping clients be disciplined about capturing their valuable memories is a great way to show you care.
From here, you'll be able to take your client relationship to the next level while at the same time developing that relationship with the next generation.