Financial advisors are in a position to help clients realize their passions and goals through legacy planning, as well as helping them pass on their money, according to Michael Lynch, vice president of strategic markets at Hartford Funds.
Crafting a legacy for clients involves more than deciding how to distribute money and physical assets, Lynch said in an interview with Financial Advisor on Monday. “The beauty of the situation for an advisor is that he or she can connect clients with ideas and resources. It is refreshing to see how enthusiastic clients are when an advisor gets involved in planning a legacy," he said.
“The planning centers on the open ended questions the advisor asks,” he added. Lynch called it a “thorough estate plan” that takes the goals of the donors into account, as well as the personalities of the recipients.
Hartford Funds works with financial advisors to help them connect to clients. It does not provide legal or tax advice but tells advisors to have a team of consultants on hand to provide well-rounded advice for clients.
Face-to-face meetings work best, in which advisors can ask clients to review their goals, Lynch said. “Do they want to start a business, travel or provide for the children and grandchildren? Every advisor has likely spoken to their clients about the importance of beneficiaries and proper documentation of who will inherit their hard-earned savings, but how many advisors have actually helped their clients with legacy planning?
“A legacy is more than just the passing on of assets—it’s the passing on of goals, thoughts and hopes for those assets,” he added.
The planning process starts with the client taking an inventory of their assets, including life insurance, real estate and savings, he said.
“Once you have these details mapped out with your client, they should decide who they want to inherit that wealth. This doesn’t replace the detailed beneficiary and will planning, but should coincide with it,” he said.
Then they should decide what they want these assets to accomplish once they are gone. If the assets are to go to children, the client has to determine if the children are equally capable of handling the assets, Lynch said. Or, if the assets are to go to the grandchildren or their education, the client has to assess how that can be accomplished.
“I’m a big fan of trusts,” Lynch said. “A client can set up separate trusts for the children and grandchildren, depending on whether they are good with money or if they will go through an inheritance in a few months. It might cost a little more to set up multiple trusts, but the peace of mind is worth it.”