Allaying fears about whether a client’s daughter will be at risk of attack after inheriting around $500,000 is just one real-life example of estate planning advice cited by Gil Gordon, principal of RI Lower Hunter.
“Our industry, because it’s so focused on product and strategy, has missed the opportunity to say to the families ‘what keeps you awake at night?’” says Gordon, who heads up the practice, which is part of ANZ’s RI Advice network.
In the above example, Gordon says after a number of meetings with the husband and wife duo, he was puzzled as to why they continually dodged questions about their estate.
“I couldn’t get them to talk about the enduring power of attorney of their estate, which is worth a couple of a million dollars,” he says. Gordon eventually asked the wife discreetly, while her husband was out of earshot.
She told him their son-in-law is a convicted violent criminal, and that if their daughter was to inherit, they were genuinely afraid for her life, Gordon says.
This concern had been eating away at the client for around 20 years. With Gordon’s help, they explored various ways to address the problem, such as implementing a trust structure also involving their sons as signatories. The final plan involved a Sydney CBD-based legal practice acting as a trustee, an arrangement with sufficient distance from their son-in-law and security to give the client peace of mind.
“You’ve got to get into their family story, because they want to talk about it, but perhaps nobody’s ever shown an interest,” Gordon says.
His business has gradually increased its delivery of estate planning services since around 2007, in response to client demand and also shrinking revenues that hit many businesses as a result of the GFC. “You can’t just charge more for what you’ve been delivering to clients for the last five or 10 years, we needed to have a new value proposition.”
“The Future of Financial Advice (FoFA) reforms also played a part. “When we moved away from commissions, we suddenly had to impress the client more than we had to in the past, we had to add a value proposition…and we wanted it to be something ongoing, not transactional,” Gordon says.
Evolution
The overall role played by advisers has shifted considerably in line with economic cycles, technology and information availability.
“Financial advisers used to be the keeper of the secret knowledge around super funds…and then we became the strategy guys, but these days Google and all the robo-advisers out there can make strategy simple, you don’t need an adviser to execute some of the basic strategy.
“There’s an evolution, we now need to get deeper into the things that are not product but are highly personalised,” he says.
The ageing demographics of the Australian population – and therefore of financial planners’ client bases – is also a major impact: “As the strategic advice opportunities diminish after age 65, you need to be doing more that relates to things like estate planning, cash-flow modelling and living financial modeling.”
In terms of execution, part of RI Lower Hunter’s estate planning solution revolves around client reports and documentation its advisers call “the information that matters.”
Delving deeper than a standard fact-find, these outline specific client information pertinent to a remaining partner or family member upon the death of a client. This includes the place and date of marriage, children’s names, the location of will, executor details and any funeral instructions.
Powers of attorney, guardianship documents and more granular information like council rates, utilities providers accountholders (water, electricity and gas), family trusts, SMSFs, bank accounts, cars, investment properties and capital gains tax details are also included.
In another example, RI Lower Hunter came up with a plan to protect the financial wellbeing of a clients’ beneficiary who suffered from mental illness. Her parents were concerned about how she would handle an inheritance in the event they pass away, and how this stress would be complicate her health concerns further.
“Effectively, we set up trusts in the will, so all three children were trustees of their own trusts, to protect the daughter, as they just didn’t feel she was strong enough yet should the will be needed in the next five or 10 years.
“The conversation was all around how well they get on, what are their roles and responsibilities and what solution can we build for these kids that’s meaningful and protects them,” Gordon says.
