The current economic environment reinforces the importance of a comprehensive and repeatable process to address challenges your boomer clients face. Whether your clients' wealth is valued at $10,000 or $10 million, it is important to proactively address issues of managing their wealth.
There are eight wealth management issues that are most important to clients and their families. Each is interrelated and acts like a balancing scale. These issues include investment management, cash flow and debt management, family risk management, retirement planning, education planning, legacy planning, business planning and special situations planning. If an adjustment is made to one issue, it affects the others. Without the knowledge of all the issues, your clients may find their finances out of balance.
When it comes to family risk management, are your clients prepared for the unexpected? Even the best investment and financial plans can crumble if clients have not properly prepared for the risks that exist for every family. Should something happen to the client or a family member such as a disability, death, or a long term care need, the careful planning and investing strategies can be unraveled in an instant.
By learning more about your client's situation, you can evaluate the current risk plans to determine if they are adequately meeting the client's needs at this stage of life and as the client plans for the future. Clients may believe they have minimized their risk by having life insurance; however, because the world of risk management is changing quickly, an advisor should conduct an evaluation of their risk and the efficiency of their plan. Even a policy put in place a few years ago could be less efficient than what is now available. If modifications are needed to their risk management plan, you should make suggestions that not only address the client's risk management needs, but also consider the tax implications of these changes.
By reviewing all of the eight wealth management issues as a starting point, an advisor and client have the opportunity to define, prioritize and begin the process toward evaluating these issues. For example, if family risk management is an important topic to the client, an advisor should hone in on the need. From this point, a gap analysis can be done that essentially takes a snapshot look at the numbers and determines if there is a gap between the current family risk management situation and the future objective. The use of projections allows the advisor and client to have a "what if?" dialogue about how to minimize family risk. With this groundwork laid, the product solution discussion involves the advisor making recommendations about how to fill these gaps and manage these wealth issues.
By adopting a repeatable process with clients and their wealth management issues, an advisor builds credibility by addressing all of the clients' issues and concerns. In addition, a family risk management review becomes more routine, which increases the probability of an enhanced and rewarding client experience. While family risk management may be your clients' most pressing concern initially, a complete wealth issue evaluation can help you comprehensively manage a client's wealth and manage all risks.
Roger Ochs is president of Irving, Texas-based broker/dealer H.D. Vest Financial Services.
