Help your clients create the legacy they want

Advisors want to help clients secure a lasting legacy, but where do they start? “Ask your clients what legacy they want to leave behind,” says Rocco Taglioni, Senior Vice-President, Head of Distribution, Individual Insurance and Wealth, Sun Life Financial. “How do they want to be remembered and how will they achieve that goal? If clients are accumulating assets without considering their legacy, answering these questions can lay the foundation for a comprehensive estate and legacy plan.”

Keys to earning the family’s business
Since money is often a sensitive topic for families, navigating the wealth transfer landscape can be difficult. While advisors need to help their clients execute an orderly, tax-efficient transfer of wealth (more about that later), it’s equally important to help a client’s children prepare for their inheritance. It takes time and effort to nurture relationships with the adult children of clients, but cementing these relationships before an intergenerational wealth transfer can help advisors retain assets.

Once advisors are introduced to their clients’ children – research suggests about 65% of children have never met their parents’ advisor¹ – they can initiate an exploratory discussion about wealth transfer. Advisors who proactively lead a legacy conversation can focus their clients on vital financial issues. Furthermore, when advisors expand their definition of “client” to include other generations, they will better position themselves to win the whole family’s business.

“We recommend four key steps to create a successful legacy and earn the family’s trust,” says Taglioni. “First, gain a strong understanding of the family’s dynamics, goals and values, to discover what they want to achieve and why. Second, speak frankly with the children about their parents’ legacy wishes and communicate in a way that resonates with these individuals. Third, only seek to convert the children into clients once you’ve established a rapport, built trust and proven your value. Fourth, set the legacy plan in motion while ensuring family members remain aligned with the plan.”

Build a strong legacy with insurance products
Before engaging family members, advisors should help their clients establish a clearly defined, achievable legacy plan. In a recent survey, when respondents were asked what’s most important about a financial legacy, the top response (38%) was the desire not to financially burden their family when they die.³ Life insurance can reduce the financial burden through guaranteed death benefits and enhance tax efficiency through the bypassing of probate and other estate costs, leaving heirs with more money.

Advisors can also integrate guaranteed wealth products into a legacy plan to complement life insurance. For instance, guaranteed investment funds (GIFs) offer a tax-free death benefit guarantee and the potential for long-term capital growth, while also providing insurance benefits like potential creditor protection and the ability to name a beneficiary and avoid probate. Some companies may also offer a legacy settlement option with their GIFs, which further supports the efficient transfer of wealth to beneficiaries.

Proper legacy planning and intergenerational wealth transfer are crucial for clients and their families. By establishing relationships with family members and working with them to plan and administer the transfer of wealth, advisors play a key role in keeping families harmonious and financially secure, while also helping these same advisors continue to build successful practices.

¹ MFS Investing Sentiment Survey, (U.S.) April 2013
² PwC Global Wealth and Private Banking Survey, June 2013
³ Sun Life Retirement Now Report, 2016