Many clients do not like talking about death, disability, getting sick or injured, getting older and needing assistance – plain and simple!
As financial professionals work to build their clients’ “financial house” they often put together an architectural plan that includes:
- Net worth calculations.
- Investment strategies.
- Education planning.
- Retirement savings plans.
- Budgeting and cash flow analysis.
- Business succession planning.
These elements are sure to make the “house” beautiful and comfortable to live in. However, there are fundamental parts of a financial plan that provide for a solid foundation. As we all know, without a strong base, a house can come crashing down.
How do you build a strong base for a financial plan? First off, conduct a risk management review to help uncover any potential cracks in the foundation for the plan you’re building. Below are some questions to ask your clients as you work with them to develop a solid plan:
- What happens to your family if something happens to you?
- What happens to your business and your key employees if something happens to you?
- Can you continue to live comfortably if you couldn’t go to work for more than six months?
- Will all your adult children help in the same way if you or your spouse need extended care in retirement? Do you have a plan if this happens?
Clients often do not like having conversations around these important questions. It’s not uncommon to hear responses like “I’ll think about it,” “I have enough insurance” or even “I don’t like insurance.”
However, one option that can be leveraged to keep the conversation on the table when clients respond with these types of answers is the use of waivers. Clients may re-evaluate their thinking, and take the dicsussion more seriously, if they are required to sign off on declining coverage for risks uncovered during the planning.
Additionally, waivers can help protect financial professionals if clients still choose to not get coverage and in the future they or their families question why there wasn’t more done to protect them from these risks.
A second option to consider, when your clients have adult children, is asking them to consider a family meeting, to get the grown kids involved with some of the decisions being made regarding the parents’ retirement and elder care decisions. While the parents certainly don’t need to share every detail of their financial situation with the kids, having a joint discussion about the parents’ wishes and expectations around retirement, disability and long-term care decisions, including funding, can lead to productive planning decisions.
As a best practice, if your clients decide to not protect their families, their retirement, their businesses, their key employees, or their income, or decide to self-fund their extended care, financial professionals can ensure they are protected by having clients decline the coverage and then include the documentation in the client files and notes.
Additionally, if you are part of a planning team that includes the clients’ other financial professionals such as bankers, attorneys, and accountant, copying them on this correspondence is beneficial and potentially productive down the road when it comes time to revisit the conversation or create referral relationships.
Eileen Shovlin is regional director, sales, at Crump Life Insurance Services. She may be contacted at [email protected].
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