If you were to list the essential considerations in creating your financial plan, many people would mention goals, income tax planning, estate planning, evaluation of their current situation, retirement concerns, and investment planning, among other factors.
While these should be part of your financial plan, one essential element often fails to get the attention it requires: communication.
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Communication with a financial advisor often feels like a series of scripted questions like “how much?” and “to whom?” While these questions are part of any financial plan discussion, they should be one small part of a much larger conversation.
It’s essential for our advisors to understand your desires for your legacy, family, and future to create a customized financial plan. Your advisor should tailor your financial plan to what matters most to you, the areas you are passionate about, and the role your wealth can play relative to these values.
We believe financial planning should be both results-driven and relational. When your financial plan includes life-changing decisions, you should feel like the process is genuinely personal — because it is.
However, conversations with your advisor aren’t the most important aspect of your communication plan. Communication with your family is the key difference between leaving a legacy and just leaving a bank account.
When individuals don’t thoroughly communicate their financial plan to their family, their beneficiaries frequently misunderstand the legacy they were trying to leave.
Take Ed and Edna, for example. Both saw wealth as something that should be earned, not given. They left a portion of their estate to their son and two daughters, but the majority went to a local charity where they had volunteered for more than 20 years. Since they did not take the time to discuss their financial plan with their family, their children were confused and hurt. They asked questions like, “Didn’t they trust us?” and “Were they angry about something?” Confusion and frustration made a time of mourning even more difficult.
Artie and Annie took a different approach. Like Ed and Edna, Artie and Annie believed that wealth should be earned. They also had a strong desire to make a transformational donation to a local non-profit. Artie and Annie had a communication conversation with their children about their plan, giving them an opportunity to ask questions and understand their perspectives. After their passing, Artie and Annie’s children understood their parents’ underlying desire to give to their children and their community. Even if their beneficiaries had disagreed with some aspects of the allocation, they wouldn’t have questioned their parents’ love or legacy.
These two couples faced very similar challenges in planning their estate, but the second couple fostered transparency and clarity by taking the time to communicate their desires with their children. It is a simple yet effective way to leave the legacy you desire.
Even in an ideal situation where your values align with your children’s, these can be difficult conversations. Children who fully support your charitable objectives can still struggle when they find out their inheritance will be smaller than they had anticipated. These conversations can go well, but sometimes feelings make communication challenging. The best approach is to include a third party who can help facilitate communication. This is not uncommon in estate planning, but it can be especially beneficial when working with an advisor who understands the legacy you want to leave beyond your bank account. A legacy coach can help you avoid common pitfalls that derail the conversation so that real communication and understanding can occur.
Our approach to estate planning includes a communication meeting with both your advisor and your family. This provides the opportunity to create a legacy and share your vision with those who are affected emotionally and financially.
To learn more about creating your financial strategy or schedule a consultation, contact us! One of our trusted advisors will reach out to you about how you can prosper while living aligned with your values.
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