Legacy
Exploring how a client views his or her life legacy is not a matter of reviewing which assets the client will leave behind when he or she dies, as much as it is a matter of how the client wishes to share his or her values and extend his or her influence while alive.
A client may consider it paramount to share values with children or grandchildren, a religious community or charity, or even a city. Many clients value some combination of these intended beneficiaries.
Advisors need to understand the values a client intends to sustain or foster, learn about the audience or recipient, and the manner in which these values are to be transmitted, before structuring financial vehicles to transfer the client’s assets.
Lifestyle
The heart of a well-aligned financial plan calls for the advisor to take stock of a client’s lifestyle. How does the client like to live? How does the client save and spend? What gives the client gratification? Advisors must know these items if they expect to tell the client what’s necessary to achieve his or her goals. That, in turn, is the prerequisite for the advisor and client both discovering whether the client is ready to do what’s necessary to achieve his or her goals.
This doesn’t always have to mean cutting back on joys like dining out with the family or spending less time on vacation. Clients are often surprised to learn this could mean cutting back at the office so they can perform more volunteer work with cherished philanthropies, or purchasing a lake house where they can host large family gatherings. Other steps, including but not limited to innovative investing, also may be necessary for clients to achieve their goals while maintaining their lifestyle.
Wealth
Once the advisor has gotten the client to address dreams, legacy and lifestyle, it is time to assess the client’s wealth. Advisors and clients must work together to look through many records, some the client probably never thought to incorporate into net worth calculations. In addition to bank accounts, credit cards, brokerage accounts, retirement plans, pay stubs and mortgage statements, it’s worth digging into medical records since family health-care costs can greatly affect one’s wealth over the long term.
The advisor has several duties at this stage: to make sure the client’s wealth is accurately identified, organized and working for the client; and to position the client to make quick and easy adjustments when life’s uncertainties emerge.