TALKING ABOUT LEGACY
AND END-OF-LIFE PLANNING WITH CLIENTS
Technology
Gina Lauer

Gina Lauer writes the Technology column for Bank Insurance & Securities Marketing. She can be reached at glauer@bisanet.org.

MOST INVESTMENT advisors who are putting together financial plans for clients ask them if they have prepared a will, a durable power of attorney, and a health-care proxy or living will. But do they go on to the next step and ask if they have their end-of-life or personal matters in order?

Even if they’ve tried, the client’s reaction may have discouraged them from ever bringing the subject up again. It’s easy to talk with clients about the birth of a child, a new house purchase, sending a child to college, and even retirement. But bringing up inevitable end-of-life matters can make a client (and advisor) uncomfortable. Why? It causes them to confront their mortality, and that isn’t something people like to think or talk about.

That’s why most advisors and clients rarely, if ever, discuss such plans until a personal crisis occurs in a client’s life, according to Mark Colgan, president of Colgan Capital, a financial services practice in Pittsford, New York.

The topic isn’t being addressed

As Baby Boomers enter their retirement years, they will be addressing end-of-life issues "that they really haven’t focused on yet," Colgan says.

The reason the topic isn’t being addressed is that, one, people are reluctant to talk about death, and two, the financial-planning community as a whole has failed to come to grips with the issue.

"It’s our responsibility to bring up the topic and discuss it to the extent that [clients are] willing to cooperate, because it should be part of holistic financial planning," Colgan says.

Colgan started taking a personal interest in educating his clients about end-of-life details after his wife died when she was just 28 years old. Even though their financial and legal matters were in order, he found himself unprepared to handle all the personal details—funeral arrangements, a burial site, writing an obituary—while he was overcome with grief.

That experience made him realize that if he, a financial-planning professional, found it difficult to cope, how did the average person even begin to deal with such matters?

As a result, he wrote The Survival Assistance Handbook and recently launched a Website, PlanYourLegacy.com, where people can securely record personal and practical information, document their life story, and make their final wishes known to loved ones.

"The reason I built PlanYourLegacy.com was, as a financial advisor, I needed a tool that would allow me to help people through this end-of-life planning process. Instead of just talking about it, I needed a tool that would actually step them through it. Because it’s so personal, a lot of these details need to be taken care of in the comfort of your own home," Colgan says.

He isn’t alone in his desire to educate people and financial advisors about the importance of end-of-life planning.

Allianz American study

Results of the Allianz American Legacies Study, released in July 2005, also pointed to the need to talk with people about legacy and end-of-life matters.

The purpose of the survey was to get a perspective on what people are thinking about inheritance in light of the fact that some $25 trillion is going to pass from generation to generation over the next two decades, says Mark Zesbaugh, president and CEO of Allianz Life Insurance Company of North America.

When focus groups were asked about the concept of inheritance, 'they clammed up.' But when asked to talk about 'legacy'—and what it means to them—the floodgates opened.
— Mark Zesbaugh, Allianz Life

"As a financial services provider, we wanted to get some perspective on what both consumers and distributors were thinking about when it came to this transfer of wealth," he says. The study included more than 2,500 Baby Boomers and elders.

Initially, focus groups of Boomers and Boomers’ parents were asked about the concept of inheritance, but "they clammed up" and were reluctant to talk about it, Zesbaugh says. So they went back and asked them to talk about "legacy," and what it means to them.

Then the floodgates opened. The focus groups started talking about more than the financial aspects of death.

"Because when people talk about inheritance, they think about money—money and death," says Zesbaugh. "And when they think about legacy, they think about life. How do I want to be remembered? What are the important things? What kind of legacy do I want to leave? What are my values and wishes that I want to have passed on? And what about my personal possessions?"

Helping clients with end-of-life planning is one way for financial advisors to differentiate themselves, says Colgan.

Findings showed that money wasn’t high on the list. In fact, passing along "values and life lessons" was overwhelmingly considered (by over 75 percent) the most important element of a legacy for both Baby Boomers and their parents’ generation.

From the study, Allianz uncovered four pillars of legacy: values and life lessons, instructions and wishes to be fulfilled, personal possessions of emotional value, and financial assets or real estate.

Even though people thought it was important to discuss legacy issues, company executives found out that a lot of people still weren’t doing it.

The study found that 68 percent of Boomers and 71 percent of those in their parents’ generation say they have a high comfort level discussing legacy and inheritance, yet only 31 percent of elders and 29 percent of Boomers have had discussions that included all four pillars of legacy.

In addition, the study found that non-financial leave-behinds—like ethics, morality, faith, and religion—are 10 times more important to both Boomers and elders with children than the financial aspects of a legacy transfer.

From the study, Allianz has developed tools that financial advisors can use with their clients to help them with legacy planning. Included are client brochures to be used by financial advisors, and their clients and families; ‘legacy conversation cards’ that advisors can use to open up discussions with clients about the four pillars of legacy planning; an interactive CD-ROM, a "Living Legacy Discovery Journal," for clients; and materials to help them put on a client presentation or seminar.

"We’ve put on seminars, ‘Webinars,’ and many other things to help educate," Zesbaugh says.

Results of the study have helped advisors gain awareness of what their clients find important to pass on to future generations.

"Clearly the financial assets, [such as] the real estate, are important elements of this, but to the extent that the financial advisor can bring in some more of those intangible aspects, their ability to build a stronger relationship is significantly enhanced," Zesbaugh says.

Colgan says that helping clients with end-of-life planning is also a way for advisors to differentiate themselves.

"You’re reaching out to clients to offer them a service that most advisors haven’t even discussed with them," says Colgan. "So you’re showing them an extra level of concern and an additional service that hasn’t been brought to the table by anyone else."

AXA’s ‘Family Love Letter’

AXA Equitable is another company that stresses the importance of incorporating legacy and end-of-life issues into a financial-planning practice. About five years ago, AXA started the Family Love Letter program, which encourages people to gather and write down all the information they feel might be important or necessary if they become incapacitated or die.

Donna Pagano, vice president of the Women’s Markets Program at AXA Equitable, is the lead on AXA’s Family Love Letter program, a system designed to help people organize their wishes and assets and ‘get their house in order’—financially and emotionally.

Pagano gives presentations and workshops throughout the country to help people compile vital information that families will need to know. The program reaches consumers through AXA Equitable’s retail and wholesale distribution channels. Advisors can use the program with their clients, as well.

The Family Love Letter program covers four areas: 1) advisors and financial information, 2) insurance and benefits, 3) documents (e.g., will, trust, custodial account, and medical directives) and other information, such as safe-deposit boxes, Social Security number, computer passwords, pets, and the like, and 4) family history (personal, medical, etc.) and ethical will.

The last section includes letters—or a journal—that an individual may want to write for family members and friends. A step-by-step booklet has been created to help individuals gather and write down all of this information.

"It’s not a legal document, nor is it a financial document.... It’s intended to supplement these documents with helpful information at a very difficult time," Pagano says.

The same is true for Colgan’s Plan Your Legacy Website, and the journals and information that people collect through Allianz’s Legacy program. These programs provide ways for people to take inventory and gather all the documentation into one place. But they do not replace legal documents.

"Even a well-developed estate plan can’t help a client’s loved ones if they don’t know it exists or if they can’t find the documentation and its references," Pagano says.

Having ‘the talk’

Bringing up the topic of end-of-life plans may not be easy at first, but Colgan says that, like presenting any new product, you eventually overcome the "newness" of it.

He begins by asking permission to talk about the subject. He first asks clients if they have prepared legal documents, such as a will, health-care proxy, and power of attorney, and asks when they were last updated.

"And then I say, ‘In addition to that, I think we need to talk about the personal and practical details that would surround your death. Would you feel comfortable listening so some suggestions I might have?’" he says.

Nine times out of 10, people will say, "Yes, maybe at our next meeting," or "Yes, what are you thinking?" Colgan adds.

Barbara Friesner, a generational coach in New York City, addresses elder-care issues with families, and also offers seminars on matters pertaining to seniors and their families.

She says it’s important for financial advisors to bring up legal and practical matters with clients. "As part of their financial-planning package, this is the perfect, non-threatening way to bring up these documents in the first place," she says.

Families can be emotional, she says, "so I think it is much better if it is coming from an outside person."

Friesner often talks with groups about the values and traditions that impact seniors’ thinking.

She says many of them were not only influenced by the Great Depression, which affected their financial way of thinking, but were also molded by their formative years, when people "rarely talked about private things... certainly not money and finances," Friesner says. "So this is a generation that is not going to open up easily."

Therefore, establishing rapport is important with a senior client. "It’s more important than it is with any other generation."

In addition, Friesner says this generation has a lot of pride. This means if they don’t know or understand something, they may not ask, or they may not do it at all. Advisors may need to explain various documents, such as the difference between a living will and a health-care proxy.

AXA’s Pagano has found that many people who are either the World War II generation or have parents in that generation have hidden and buried money.

"And if they don’t write down [where it is], that poor family [will be] searching high and low," she says.

Another generational trait to be aware of, Friesner says, is the strictly defined male and female roles—the man as the person in charge of finances, and the woman as the caregiver and homemaker.

"[This] may mean the woman needs more information about the basic finances, and men are maybe more reluctant to lose even the perception of control over the finances."

Friesner says they may not like to be questioned about finances or want to show pertinent documents.

Senior parents may also follow this gender bias when they name the executor of their estate or of a health-care proxy. "So it’s also important for the advisor to encourage the seniors to name the best person for the job," says Friesner, and not base it on gender roles.

The Allianz study found that in many families with more than one sibling, there is an individual the company has dubbed the "Alpha child."

"It’s an individual that parents go through for decisions and financial aspects of legacy," Zesbaugh says.

Therefore, it’s important for advisors to be aware of this Alpha child and meet with him or her, "because parents are going to refer the information to them anyway."

An ‘ideal’ advisor

The Allianz study also delved into what survey participants considered as important characteristics of an ‘ideal’ advisor. The top three qualities in order of importance, Zesbaugh says, were: honesty and trustworthiness; the ability to explain things in an easy-to-understand way, and being a good listener.

"Their financial expertise was much farther down the list," says Zesbaugh, "so clearly the relationship aspect of it was key to building that relationship."

Both generations surveyed said that the ideal legacy advisor would be one-third lawyer, one-fourth financial advisor, one-fifth accountant, and one-fifth therapist/spiritual advisor.

According to the study, the top profile choice for the ideal legacy adviser is someone like Oprah Winfrey for Boomers and Billy Graham for those in the elder generation. High-net-worth individuals, both Boomers and elders, prefer Warren Buffet.

Part of the growing interest in legacy and end-of-life planning stems from world and national events that have impacted people personally and/or emotionally.

Workshops can help people compile vital legacy information. 'In some ways, it also provides an opportunity for healing and connecting families back together.'
— Donna Pagano, Axa Equitable

"I think that the public is becoming more open to talking about end-of-life issues because of all the events that have happened: the natural disasters, terrorism, [and] the Terri Schiavo case," Colgan says.

In addition, statistics show that in the United States, the average age of a widow is 56 years old, says Pagano.

These topics give advisors good reasons to initiate conversations on legacy and to develop a greater bond with clients. Strengthening relationships with clients not only helps an advisor develop a holistic financial plan, it can lead to stronger bonds with clients’ children and lead to additional referrals.

Pagano says AXA is working to create a matrix that will help determine how Love Letter workshops might be contributing to advisors’ businesses. But the impact isn’t always measured financially.

"In some ways, it also provides an opportunity for healing and connecting families back together," says Pagano. "The presentation I give [offers] different stories,... and the audience shares theirs."

Zesbaugh agrees. "My mother came to one of my presentations, and she said, ‘We’re going to have this discussion.’" And she brought the entire family together to talk.