Cedar Brook Retirement Expert Richard Anderson Quoted in Investment News Article

Bringing a client's family into the loop has side benefits

Establishing relationships early can help build trust for the future

May 1, 2011 6:01 am ET

A death or serious illness is not the ideal time for financial advisers to be meeting a client's loved ones for the first time. Advisers who reach out to the families of their older clients prior to health problems to discuss tax and estate issues, medical directives and other such concerns are helping everyone plan — or at least prepare — for the future.

“I've seen the importance of making sure everyone is in the loop,” said Steve Hamant, an adviser with LPL Financial LLC. “It goes a long way toward establishing a relationship.”

In fact, the adviser who communicates with a client's family stands to benefit. Many advisers who have a relationship with client beneficiaries find they are more likely to retain oversight of the assets and make new clients out of family members. Of course, some clients don't want their children to know about their financial planning details until they're gone, said Richard Anderson, financial adviser with Cedar Brook Financial Partners LLC.

Some clients don't want to deal with being accused of “favoritism” among children, he said.

Family Dynamics

“You have a lot of family dynamics to deal with,” Mr. Anderson said.

Other clients who resist bringing in their children to learn about their estate planning do not want to “create expectations that might not be healthy or might not be fulfilled,” said Dan Danese, a financial adviser with Legacy Solutions Inc.

He tries to encourage his older clients to include their children in a meeting with him to make sure everyone understands the plans that have been made, and the challenges the parents may be facing, he said.

“It's a very personal decision on the part of the clients,” Mr. Danese said.

Often children get more involved after one of the parents dies and the other is left alone making decisions, Mr. Danese said.

Several advisers said there is often a “spokesperson” representing all the children in the family with whom the adviser can discuss things and who communicates with the rest of the family. This helps the adviser limit involvement in family politics.

The meetings typically happen either in the client's home or in the adviser's office after the planning decisions have been made. Advisers point out that these consultations are not about what should be decided with regard to the clients' finances.

Some of the issues discussed with the family include long-term-care plans and other health concerns, where documents are located, burial plans and anything else clients want their children or other beneficiaries to know, advisers said.

It's better that children are let in during retirement years so after clients pass on “one layer of stress is off the table,” Mr. Anderson said. “There's a peace of mind when everyone knows the plan,” he said.

Mr. Hamant said he often will help some of his clients' children with financial services such as setting up 529 plans, helping with wills or other documents — tasks that aren't especially profitable at first glance.

“You're not making much off them because they aren't worth much, but they are the people you will be working with later on,” Mr. Hamant said. This relationship often helps the adviser retain oversight of the assets when they transfer to the next generation, Mr. Hamant said. “In my experience, not bringing them in has hurt,” he said. “There's a high probability then that you may not get these assets when all is said and done.”

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