Q&A with Dr. Thomas Deans
Thomas Dean’s book Willing Wisdom: 7 Questions Successful Families Ask is an excellent resource to use with clients as they contemplate the seemingly overwhelming task of developing an estate plan. This book has a fresh approach that delves into a qualitative approach for families to address before contemplating the more technical aspects of the will and estate plan. Dr. Deans answered a few questions regarding this important topic for our readers:
1. One of the main takeaways from this book is the potentially deeply destructive consequences (on the ones they love most) for clients from not having a well thought out estate plan. Why do you think so many clients forgo estate planning and do not have a will?
With more than 12.5 million Canadian adults without a will, the state of estate planning in this country is appalling. At the very moment in time that an aging population is leaving larger inheritances, fewer wills are being prepared and signed. Moreover, the vast majority of wills that are being written, are being held in secret from named beneficiaries. We know that 80% of inherited wealth is moving to new Advisors because the wealth transfer has happened slowly, at great expense and chaotically through the laws of intestacy. Family litigation is turning into a full-contact sport. The next generation of inheritors don’t blame their deceasedparent for the estate planning gaffes. They don’t blame the parent’s lawyer. They blame their parent’s Financial Advisor who they believe collected handsome planning fees but never delivered ‘the plan’ – including a signed will. So the next generation moves their money.
Many Advisors do just enough to not loose an account. Pushing forcefully and repeatedly on a client to prepare their will is awkward and counterintuitive. The really extraordinary Advisors are reminding their clients about the connection between writing and disclosing their estate plans, with the quality of late in life care they will receive from their family. Family secrets about money and estate plans seldom adds to the aging experience. The move by European and American wealth management firms to engage the broader family in all aspects of the plan, is both tactical and strategic. When we hear the words ‘family office’ it is a reference to family meetings and a relational approach to wealth management. If Advisors are uncomfortable talking abut family relationships and money, they better learn to attract planning associates who are comfortable, or look for a new profession. Advisors can make a good living by working for a client, but the big game hunters are increasingly working for a family of clients. Clients referrals to friends are good, but family introductions is the nirvana of successful planners.
2. Another key point in the book is that estate battles can turn even the best families completely dysfunctional. How is proactive family communication critical in reducing conflict in estate planning?
When a family develops a healthy relationship to wealth, they intuitively see the benefits of talking openly and frequently about it. Culturally, family conversations about wealth have been taboo. Paradoxically, and for different reasons, the major exceptions have been the very poor and the ultra-wealthy. It is the middle class who have developed a cultural awkwardness about family money conversations. Many believe that disclosing to their children their inheritance will automatically blunt their work ethic and drive to succeed. The reality is that the absence of family meetings leads children to often over-estimate or under-estimate the magnitude of wealth they will inherit. The result is more often than not, financial plans that are grossly under-funded.
The real crisis comes when the last surviving parent dies and there is a perceived inequity in the distribution. The revelation of prior gifts to one child, secret loans or other wealth transfers that tip the scales of fairness can lead siblings to lawyer-up and grind down their parent’s estate. A cynical view suggests that lawyers make more money litigating an estate than by writing a $500 will. But with the advent of the do-it-yourself will kits available at Staples for $19.95, it is easy to understand why the legal industry has moved on to more profitable areas of the law. That we have 12.5 million Canadian adults without a will is no accident. It is a reflection of our cultural ambivalence toward discussing money with the people who matter most – family and the legal industry’s indifference to educating the public.
3. Do you feel that Advisors who address estate planning with their clients now have less potential conflict (and even liability) later?
There is no question that Advisors who make themselves indispensible to a family of related clients, the less conflict will ensue. I ask Advisors in my audience: do you have clients who are older than yourself and who will pre-decease you? The answer is always yes. The room is always left with the undeniable fact that every Advisor will be dealing with surviving family members whether they like it or not. My question is always: why not get out in front of the issue and build a really valuable book of business that puts inter-generational wealth transfers at the centre of all that you do. The value of that book of business is significantly higher than a practice who’s client list seldom include multiple family members.
4. Planning for one’s death is difficult for everyone. How can an Advisor motivate a client to address this unpleasant topic?
The key here is to let every client know that they are not alone in struggling with the writing and up-dating of a will. Client appreciation events that deal with this subject allow everyone in the audience to gain the confidence and urgency to move forward with their family meetings and wills. The penny drops when clients connect family meetings about wealth transfers with the late-in-life care that they hope to receive from family. Clients know this stuff is not easy and their appreciation is expressed in a deep customer loyalty. Advisors who are already adopting this practice management model look at CRM 2 as a non-event; a walk in the park.
5. Complex family dynamics can cause another roadblock to estate planning. In your book you wrote: “no written will is a symptom of giving up on relationships in the present.” Could you elaborate?
Families are complex and many deeply dysfunctional. But ignoring estate planning, including writing a will does not make issues disappear. In fact, second marriages and estranged relationships create extraordinary opportunities for Advisors to design plans that are typically more complex and, quite frankly, more expensive. It is where the real need for estate plans resides. The great legends in the industry see family complexities and rush toward those family scenarios with options and resources. Clients are not naïve; they know their Advisor is sometimes called on to enter the murky waters of family dynamics, but this is where credibility and trust is earned. This is where an Advisor can find great purpose in their work. Too often financial planning is such a forward looking exercise where the rewards of disciplined investing are decades into the future. The hidden, but powerful, benefit of family meetings about wills and wealth transfers is that it can bring immediate benefits to a family in the present.
6. How do you recommend Advisor’s start the conversation with their clients about estate planning?
Books - not just Willing Wisdom - but any book on the subject of estate planning, is an inexpensive way to start conversations on this subject. But I would go further. I would ask the client: What did you like about the book? What did you not like? Ask whether you can meet with other family members to begin a family wealth succession plan. Client appreciation events with emphasis placed on educating clients about wills and estate planning are hugely popular. I find these events when co-sponsored with an accountant and lawyer, are ridiculously inexpensive for prospecting and retaining clients.
7. Do you have any final thoughts for the reader about how Advisors can facilitate a culture of “talking about money, possessions, living and dying – and writing Wills.”
Clients want to be inspired – use inspirational language to encourage clients to understand that how they leave their wealth for their family, friends and charities, is more important that how much they leave. Leaving money with context and purpose gives meaning to the life we live today. With approximately 700 Canadians dying every day, including approximately 50 each day under the age of 50, writing a will ought to be a national priority for 12.5 million Canadian adults who are without. For the remaining 12 million Canadian adults who do have a will – dusting it off and making sure its up-to-date should be an equal priority. And for the 50% of Advisors who do not have their own will written – make that a priority and share your own family dynamics with your clients. Trust is always earned the old-fashioned way: by making yourself real, vulnerable and accessable.