FPMG Offers Legacy Planning Tips for Financial Advisors

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FPMG, a performance management firm serving financial advisors, contends that one of the biggest myths about legacy planning is that children fight over money and possessions. “The truth is that people don’t – in fact – fight over things,” explains Denise Federer, Ph.D., the company’s founder. “They fight over what those things mean.” Research over the past 10 years has found that people are looking for gratification beyond material possessions and wealth. “They’re looking for meaning, memories and shared experiences.”

FPMG Offers Legacy Planning Tips for Financial Advisors

FPMG Offers Legacy Planning Tips for Financial Advisors

Communicating values and learning more about each other as a family can go a long way towards an easier transition. Early communication ensures that what’s important lives on.

FPMG, a performance management firm serving financial advisors, contends that one of the biggest myths about legacy planning is that children fight over money and possessions. “The truth is that people don’t – in fact – fight over things,” explains Denise Federer, Ph.D., the company’s founder. “They fight over what those things mean.” Research over the past 10 years has found that people are looking for gratification beyond material possessions and wealth. “They’re looking for meaning, memories and shared experiences.”

This recent shift in thinking illustrates why financial advisors, attorneys, and other professionals involved with high-net-worth individuals need to consider the values-end of legacy planning. “Values are no longer only important to parents; they’re important to children, too,” Dr. Federer comments. “Communicating those values and learning more about each other as a family can go a long way towards an easier transition. Early communication also ensures that what’s important lives on.”

“There are a number of ways business advisors can approach this subject with their clients,” counsels Dr. Federer. “The goal is to create the best conditions for a smooth, values-driven transition.”

Financial advisors typically work with the parents during the legacy planning process. FPMG offers these tips on helping clients pass on their values to their children:

  •     Create an Ethical Will – “Ethical wills are a fantastic tool because they go well beyond the ‘who gets what’ level of traditional wills,” Dr. Federer states. Ethical wills require parents to define who they are as people and what values they want to see perpetuated in their families. “In other words, an ethical will is the ‘why’ of life,” Dr. Federer explains. “Not only can this help your family get a better grasp on who you are as a person, but it also makes it easier for your loved ones to respect and accept your wishes – especially in matters where ambiguity exists.”
  •     Regularly Discuss What’s Important – Business advisors should recommend their clients communicate how they want to be remembered beyond their money. “Tell them in your own words by sharing examples and stories from your life that amplify your values.” Communication is an essential component in many life-planning processes. “In legacy planning, communication takes on a special meaning,” Dr. Federer reminds financial advisors. “This is what your clients are leaving behind. It’s up to business advisors to help their clients ensure they are heard.”
  •     Agree to Disagree on Hard Things – Legacy planning is often an emotional process. “Kids are not going to agree with every decision their parents make,” Dr. Federer warns. Financial advisors should help their clients remain firm in their decisions. “Kids will be far more likely to follow through with something they don’t like if they understand the thinking and emotions behind it,” Dr. Federer explains. “When your client makes a decision, they need to stand behind it. It’s important to also have the empathy to explain the reasoning so the family has a higher level of understanding.”

Financial and business advisors often work directly with the children of their clients. Dr. Federer offers tips on helping adult children through the legacy planning process:

  •     Encourage Questions – Financial advisors should encourage children to discuss parents’ wishes early and often. A clearly defined plan of what is going where and to whom is only the first step. “Children need to ask the ‘why’ behind those decisions,” explains Dr. Federer. “Parents can sometimes be far deeper and more interesting than their children give them credit for. These kinds of discussions are not only wonderful opportunities to get to know parents on a deeper level, but it also makes it easier to follow through with their wishes when they’re gone.”
  •     Communicate the Things That are Important to You – “Family values are a two-way street,” says Dr. Federer. “When parents are deciding what to match up with whom and why – it helps to know what’s important to the children, too.” Financial advisors should enable adult children to speak up about what is most meaningful to them. “The best way to ensure that a legacy is lasting is to make sure the recipient reflects those same values and is best equipped to carry them into the future. Don’t be afraid communicate your feelings.”
  •     Don’t Make Assumptions – Children need to understand their parents’ wishes. “If children are unsure about what goes to whom, financial advisors should encourage them to ask their parents,” counsels Dr. Federer. “Asking only makes the parents think about something more in-depth and can lead to clearly defined wishes. The more clear and comprehensive they are, the easier the transition will be.”

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