Rethinking Estate Planning as Building Beneficiary Relationships

An advisor’s firsthand account of what it feels like to lose a dear client in the worst possible sense—death—and then watch their family abandon well over a decade’s worth of thoughtful financial work by choosing another advisor thereafter. 

It was in the winter of 2014, or about two years ago, that I became part of a staggering but real statistic: The 90 percent of advisors who lose assets upon the death of a client when they do not have a relationship with the beneficiaries. It is estimated that 70 percent of widows will change advisors after their husband’s death⁽¹⁾, and the reality is that most advisors are far from prepared for the inevitable day when their best client, every client, will pass, or the aftermath that immediately follows. Take it from me: I was one such advisor.

There is no worse feeling in life than the passing of a loved one. The finality of death cannot be changed. But life goes on, and most of us choose to play this thing out to the end, in whatever form that takes. As the Roman emperor Marcus Aurelius once said, “Death smiles at us all. All anyone can do is smile back.”

When the male half of a longtime husband-wife client couple of mine passed away, leaving behind his wife and daughter, it was extremely sad. The days went by, and after a month or two, my client and her daughter came in to discuss the accounts. I could sense immediately that I was in an odd and unfamiliar territory. I had assumed that my relationship with the spouse would be sufficient enough to keep me working for the family for the long haul. But, you know what they say about assumptions. 

Within three months, I received transfer paperwork to move the accounts. Unbeknownst to me, the daughter had her own advisor and was not living in my state. I did my best to save the relationship and gave a strong pitch, but it was to no avail. Subsequently, one of my top clients, a multimillion-dollar account, was transferred—and just like that, a great client was gone.

In the months following losing this client, I did a lot of deep thinking. I attempted to figure out where I went wrong. Feeling the sting of losing a great client, whose assets I had protected and grown with over more than a decade’s worth of hard work, was a terrible feeling on every conceivable level, and I most certainly wanted to make sure this didn’t happen again. With this new perspective, I began to analyze my book of business, and more importantly, the relationships I had with my clients’ beneficiaries.

The lessons came hard and fast, both for my business and for my life. First, I needed to rid myself of the mindset that since my clients averaged over age 50, their children or beneficiaries would not have sufficient assets for me to work with them. Basically, I had allowed myself to believe that they weren’t worth my time. I couldn’t see the forest for the trees with this type of thinking. This might have been the single most harmful belief in my business, albeit a common thought process of many of my colleagues in the financial advisory space.

While I knew the main mechanism for engaging younger beneficiaries would be through estate planning services, I reviewed my processes and came to another revelation: The estate planning offering I was providing wasn’t enough! I did estate planning with all my clients, or at least what I thought was sufficient estate planning. I provided the link to our main estate planning attorney, collaborated on constructing their documents, worked with our in-house CPA to tax-plan for those estates large enough to be affected, and assisted with titling accounts or suggesting ideas to protect the assets. Ironically, none of these measures were good enough. Using this approach wasn’t going to solve the connection to the beneficiaries.

I soon came to several realizations: First, I fully accepted that estate planning was as important as financial planning, and secondly, I knew all my clients would pass someday. It was also my reason to better engage with the beneficiaries. I learned that estate planning involves more than just the transfer of money and the protection of assets. Most of my clients held the same incorrect assumptions as I did. What estate planning really includes is your client’s legacy, their family dynamics and the core values, funerals, heirlooms, pictures, stories... The list could go on and on. This type of extended planning was the missing link to connecting with those beneficiaries and solidifying those relationships. By providing a more complete level of estate and legacy planning, I developed a reason for engaging those beneficiaries regardless of assets. What I found out was that when I began this level of planning, my clients engaged me with their beneficiaries and made them an intricate part of the planning because it included their legacy.

The bottom line is that my clients really didn’t know how to accomplish this on their own, and ready-made solutions did not exist to help facilitate this kind of thorough intergenerational pass-down. My clients valued these concepts as much as they valued their own money and the transfer of it. They wanted to share stories, they wanted to remove the burden to their families upon death, and so much more. When I introduced them to this concept, a whole new door opened. The deliverable now to my client was more thorough, and this fostered many new relationships and referrals. Simply put, by focusing a little more on this area of my practice, I protected the bottom line, my clients, and the relationships I have with them and their beneficiaries, not to mention the growth and the future of my practice. If you’re an advisor reading this article, take it from me: Strengthen your estate and legacy planning now or you will feel this pain later. Don’t fall into the trap I did.

In life, the things we fear the most are the things we avoid. While I knew my relationships with my clients were strong, my relationships with their beneficiaries were average at best. I just assumed that I wouldn’t have to cross that bridge anytime soon and that when I did, I would be fine. Now, I leave nothing to chance.  

Scott Huff is a financial advisor and the CEO of Yourefolio.