Advisor Poll: Having no plan in place is the leading estate planning mistake
Mar 06, 2019 — CLEVELAND, March 6, 2019 /PRNewswire/ — Today, Key Private Bank, the wealth management arm of KeyCorp (NYSE: KEY), released the results of its latest advisor poll, which surveyed nearly 130 of its client-facing advisors about their experiences working with high-net-worth (HNW) individuals on estate planning. The survey explored the recommended timing to start, review and revise an estate plan; the biggest challenges that clients face in doing so; and recommendations for communicating estate plans with family members.
The majority (77 percent) of advisors say that the hardest part of estate planning is navigating interfamily dynamics, and nearly half (43 percent) believe that the biggest estate planning mistake is having no plan at all. To add, the biggest misconception among clients is that “they are not that old and can plan later,” say half of advisors (49 percent).
Not Having an Estate Plan is the Biggest Mistake
Having no plan at all is the biggest estate planning mistake, cited by four in ten advisors (43 percent), followed by not updating documents regularly (35 percent). Many also say clients inaccurately believe that a will can oversee the distribution of all their assets (35 percent).
Most often, estate planning conversations are triggered by advisors raising the topic (29 percent) or life-altering events such as an accident or health crisis (25 percent). However, advisors say that clients should not wait for these instances, and that clients should start estate planning earlier than they may think.
“Some clients may be hesitant to have a conversation about estate planning with their family members because they fear that sharing their wishes will cause conflict,” said Andrea M Griffiths, J.D., CWS® national manager Trust Settlement Administration, Key Private Bank. “In designing an estate plan, clients must sort through a number of emotional and psychological issues, ranging from treatment of children—where what’s fair is not always what’s equal—to the beneficiaries’ perception of their relationship with the grantor, as well as their behaviors and potential biases toward other beneficiaries.”
Estate Planning Conversations Are Rarely Prompted by Those Who Need Them
Convincing clients to put an estate plan in place is a challenge, according to 34 percent of advisors—but it’s not as difficult as convincing clients to communicate wishes openly and honestly with family members (57 percent). Eight in ten (81 percent) advisors say only “some” or “hardly any” clients are having open conversations about estate plans and wishes with their families. As a result, four in ten (39 percent) advisors say half or fewer than half of estate plans holistically capture their clients’ values in the transference of wealth to the next generation.
“The sensitivities of talking about estate planning often presents emotional hurdles to putting a plan in place—especially when multiple marriages and blended families are involved,” said Karen Arth, head of trust with Key Private Bank. “To navigate these complexities, we encourage our clients to take a proactive approach to estate planning by talking through their wishes and desires early on with family members to set expectations, delegate responsibilities and avoid misunderstandings later on.”
The poll also revealed that most estate planning conversations are being prompted by advisors (66 percent)—rather than clients or their family members—further highlighting a need for more proactive family financial discussions and the critical role that advisors play in moderating these conversations.