(June 2004) Advisors who have successfully incorporated insurance and estate planning into their practice feel strongly that the holistic approach has helped them to expand their book and attract higher net worth clients. Building a business based on the financial planning process will provide many advantages to an advisor, including:

  • Increased share of wallet;
  • Increased revenue;
  • A more in depth relationship with clients; and
  • Key positioning as quarterback of the client’s financial affairs.

Executing on estate planning

1. To determine if estate planning is right for you and your business, ask yourself:

  • Do I already use a planning process?
  • Am I comfortable asking my clients about estate issues?
  • Am I comfortable bringing in an expert when things get complicated?
  • Am I willing to spend time with my clients gathering information?

2. If you answered “yes” to the above questions, estate planning may be an excellent way to increase revenues and strengthen your client relationships. If you answered “no” to any of the above questions, estate planning may not be an appropriate service offering for you.

3. Hold a team meeting to discuss the addition of estate planning to your business. You and your team will need to learn as much about the process as possible (strategies, software, timing, etc.).

4. Talk to other advisors who offer estate planning and use the shared resources at your head office.

5. Revise or create a client questionnaire to include questions about estate planning (your firm will probably have a questionnaire).

6. Modify your contact management system to include the additional information you will be collecting from clients.

7. Add a reference to your estate planning services in all of your marketing material.

Before you talk to clients about estate planning, do your homework. Trust is a very important part of the process, as you will be discussing very personal issues. As the advisor, you may decide to not be an expert in every area, but it is important for your clients to know that you have access to these experts.

Incorporating insurance

Because client relationships are built on trust, if a need is present, it should be discussed. Clients are looking to their advisors for more than just investing.

The best way to incorporate insurance into your business is to build a process around it. Here are three quick steps to help you do this:

1. Bring up insurance early in the relationship. Touch on it at your first meeting while gathering other information. Gauge your client’s receptivity and make note of it for future reference.

2. Create a financial statement of goals by completing a thorough investment policy statement (IPS). (For a customizable IPS template to help you with this key task, please click here.)

3. Identify a few planning-related questions to ask a client during a review. Do not just focus on insurance.

Some insurance ideas

Try looking at the insurance process as a reallocation of assets — purchasing insurance for the purpose of estate planning is not always about spending new money. It is more likely about reallocating existing funds from a taxable investment into a new tax-effective investment vehicle:

  • In some cases, older clients have used their mandatory RRIF minimum payments to fund a tax-sheltered insurance policy to greatly increase the after-tax value of their estate.
  • In other cases, clients have large amounts of non-registered funds in bonds and GICs and can quickly be shown the value of investing a portion of these funds in a tax-sheltered guaranteed interest annuity (GIA) or bond index within a life insurance policy.

It is important that clients are made aware of these opportunities so that if they wish to pursue estate planning, you can start this process with them and/or refer them to a specialist on your team or in your office to provide a review.

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Client strategies

With new clients: A simple question regarding their estate in the initial interview opens the door to discuss the issue in future meetings. The question can be as simple as, “Are you happy with your current estate plan?”

Another approach is to ask the client to expand on his goals for the account. The goals of the account are a required question on a know-your-client form. In most cases, the client will answer that the funds are for retirement income and/or a safety net for any unexpected illnesses or setbacks in old age. Once the client has stated his initial goal, a simple additional question such as “What about after you no longer need the funds?” can provide the advisor with a great deal of information about what is truly important to the client.

With existing clients: The above questions may seem awkward because the client may assume that you should already know this information. An alternative might be to mention to your clients — especially around RRSP or tax season — that many of your wealthier clients are utilizing insurance products to make their investments more tax efficient. Follow this statement with the simple question “Have we ever discussed the benefits of these products?”

A less direct approach might be to add a case study or brief article to the end of your newsletter. If you can time the first article to coincide with the end of tax season you may find that clients are very open to the idea of insurance and tax efficiency after they have just written a large cheque to the tax office.

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To help you remember to discuss insurance and estate planning needs with your clients at your next meeting, click here for a checklist you can open as a customizable Word document.

For more insurance insights and advice, be sure to check out the June issue of Advisor’s Edge. To view archived Advisor’s Edge articles or to subscribe, please click here.

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Joanne Ferguson is a partner with Ontario-based Advisor Pathways, a company that offers consulting and coaching help to advisors and their firms across Canada. Joanne can be reached at jferguson@advisorpathways.com or through her company’s Web site at www.advisorpathways.com.

This article is part of an Advisor.ca Special Report sponsored by: