Almost everyone thinks they have their financial affairs at least somewhat in order for the inevitable end of their life. But it is when the details of that assumption are examined that the belief starts to fall apart, according to Spectrem Group.

Spectrem Group's research found that 86% of people think they are somewhat prepared financially for death and for the distribution of their assets. But less than half of respondents to a survey have communicated their living will directives to their families or made a list of investments and bank accounts, two examples of a lack of preparation.

That is just the tip of the iceberg, according to Spectrem Group’s report, “Down to the Last Detail: Setting Your Financial Affairs in Order,” released Thursday. The survey was based 1,791 individuals with $100,000 to $25 million in assets (excluding their primary home) who consider themselves the financial decision maker of the household.

At least half of the respondents consider themselves as fairly financially knowledgeable and to be moderate risk takers.

However, Spectrem's report found that there is a large disconnect between the actual level of preparation and the perception investors have about their own level of preparation. “Less than half of investors have a living will or medical or financial power of attorney, and less than two-thirds have a will," Spectrem said. "Only two-thirds of investors have completed the simple step of properly identifying beneficiaries on their accounts.” 

Less than half of those surveyed have purchased life insurance or long-term-care insurance, or converted their term insurance to whole life insurance, the report said.

Whether a person is actually prepared financially for the end of life or just feels they are prepared can change over time. “One of the highlights of this study was the degree to which those who were involved in the financial aspects of the end of someone else’s life had an impact on them,” said Randy Wostratzky, director of the Spectrem Group.”

Thirty-seven percent of respondents made some change in their own preparations after witnessing another’s death, while 27% made major or extreme changes to their preparations.

“End of life planning is a big opportunity for advisors to be of service to the client and to the client’s beneficiaries,” Wostratzky said. “This report speaks to the need for advisors to proactively work with clients on their end of life planning and with their beneficiaries.”