We, as humans, are a fickle lot. We strive to be happy and healthy, and we usually understand what activities and habits can get us there, but when push comes to shove, our actions aren't very coherent. It's exactly why “do as I say, not as I do” is an idiom that everyone understands.

There is perhaps no stronger example of this human trait than how people talk about estate planning in theory instead of what they do in practice.

Ask any American whether they consider estate planning to be at least somewhat important, and nearly 70% will answer in the affirmative. according to a recent panel of 2,000 respondents surveyed from the general population. Unfortunately, only a quarter of Americans (26%) have actually done their own estate planning, defined by those who have completed one or more last wills.

Why such a boring gap? It's a tale of two cities: those who work with a financial advisor and those who don't. Americans who work with an advisor are four times more likely to have an estate plan in place, and even among those who work with an advisor but have not yet made an estate plan, they are twice as likely to do so within the next two years. . The opposite also applies. Among respondents with an estate plan, 50% report working with an advisor, while among people without an estate plan, only 9% work with an advisor.

Incorporating Estate Planning

Financial planning and estate planning have long been considered close cousins, but with the largest transfer of wealth in human history now underway, sound financial planning must overlap with estate planning. Linking estate planning with financial planning may also provide the answer to how to close the gap regarding people who intend to plan their estates and turn them into reality.

There are 70 million baby boomers alive today, accounting for almost 80 trillion dollars in wealth today, approx half of America's total wealth. In 20 years, even the youngest young people will be 80 years old. Estate planning plays a major role in how this wealth changes hands smoothly and in accordance with everyone's wishes.

Many advisors already include some estate planning capabilities in their offerings. They know that their clients are thinking about estate planning and that getting to know their clients' families today can lead to better chances of holding on when the estate eventually passes.

Previous research has shown that heirs willing to inherit as part of a Large Wealth Transfer prefer advisors who understand estate planning. In particular, a McKinsey study of 7,000 wealthy households found that legal services, including estate planning and the establishment of wills and trusts, ranked as the best value offering to clients from their wealth management provider. So the demand is very high and there is a lot of room to run.

Three steps

Three steps that all advisors should consider taking now include:

1. Using estate planning to account for the giving that is happening while older clients are still alive. Currently, half of the parents are still financially supporting their grown children—essentially accelerating their future giving by providing significant advances in future bequests. As any counselor knows, some grown children can stay on their parents' payroll, while others can't. Does each family consider such giving and support as borrowing against a future inheritance, or is it unaccounted for? After the death of a parent, the probate court often divides what is left equally among relatives and is likely to disregard past gifts. This can skew the equation and lead to family strife, unless the directives within an estate plan provide clear instructions on what to do. Harmony with customers can be elusive. Thoughtful estate plans help.
2. Recruiting new clients who may not have sought financial planning but are now beginning to realize that they need to properly plan their assets as they age. Again, in a society in which half of parents still support grown children, estate planning needs may just bring new clients to the table as they begin to realize that while they were confident in managing their money, they were not are so confident in their family's financial plan for what happens next, after death. Counselors must continue their research, approaching this time with a new carrot. Involving estate planning can move the needle more than you think.
3. Providing clients with proactive assistance regarding charitable giving, which is increasingly part of estate planning. Two areas that are not within the traditional purview of a financial advisor are estate planning and charitable giving. However both are demanded by customers; increasingly, they are areas that can be simplified. Boomers include charities within their annual budgets more than 40% of the time. It seems safe to assume that a higher percentage of Boomers with a financial advisor do. These clients know that the bequests they leave are likely to be the largest charitable gifts they ever make, constituting a significant element of their legacy. There's a good chance this is already on customers' minds. Come forward.

Two peas in a pod

There are many other examples of why estate planning is important. In the future, estate planning and financial planning will no longer be cousins. It will be two peas in a pod. The day when both forms of planning are bundled is coming in the not-too-distant future, and with the Great Wealth Transfer just around the corner, now is the time to provide exceptional service before it becomes the industry standard.

David Tanti leads business development for Free willan online estate planning platform.