The unprecedented inter-generational transfer of wealth looming for Australia, driven by a huge baby-boomer demographic that holds a significant proportion of the nation’s assets, highlights the importance of estate planning like never before.
However, it’s an area that individuals often overlook, with some 45 per cent of Australians not having a Will, according to recent figures from the Public Trustee. Similarly, financial advisers frequently fail to adequately address issues around estate planning when preparing financial plans for their clients.
“Estate planning is one of the areas we’re taught about [in our training] but generally, most planners limit their advice [in this area] to a simple set of questions,” says Hans Egger, who is co-creator of the AstuteWheel Estate Planning suite of tools and a licensed financial planner.
“These conversations generally go along the lines of, ‘Do you have a Will?’ and, ‘do you have a Power of Attorney?’ and, ‘If you don’t, then you should probably go and see a solicitor and get it organised’. That’s pretty much what it boils down to.”
While clients take this advice on board, saying things like, ‘I get it, I should do that,’ Egger says they often don’t know where to start and don’t know who to go and see.
“And unless the financial planner actually organises the meeting and goes to the meeting, it typically doesn’t get done, so you end up having that conversation every year,” he says.
A recognition of these factors led to the development of the AstuteWheel Estate Planning tool, which is currently being rolled out to financial advisers across Australia in a staggered state-by-state process over the next month.
This software-based system helps financial planners walk clients through the estate planning process, ultimately producing an estate plan briefing document that they can take to a solicitor. The end result details assets and liabilities and outlines a family tree and entity diagram. Collectively, these explain who owns, owes and controls the client’s major assets and liabilities, along with the asset protection and tax consequences that need to be considered.
Best Interest Duty
Eggers also emphasises the role that estate planning guidance plays for advisers in ensuring they are meeting their obligations under the Best Interest Duty.
This is something echoed by Matt Leech, a financial adviser with independent financial advisory firm Incite Wealth.
“We can’t just dodge estate planning, we have to address it, we have to bring it up. If not, we’re not acting in [our clients’] best interests,” Leech says.
“There’s also our obligations under the know-your-client rule. You have to know what they want, you can’t help people without knowing this.”
Painting simple pictures
Because it is visually based, the AstuteWheel Estate Planning tool also clearly indicates for both the adviser and their client the key relationships, or specific risks, that need to be addressed.
Eggers points out that even sensitive topics, such as any former spouses that could potentially represent a litigation risk to the estate, can be addressed more easily.
Leech agrees with this: “It’s a good prompter…it’s not me looking [a client] dead in the eye directly and asking these things, but we’re instead seeing them on the screen. It can be an easier way to get clients to open up.”
“I’ve always believed that clients are best educated through images and pictures – we’re forever drawing pictures and graphs on whiteboards. This gives me a way to do it in a more professional way.”
He also emphasises that clients get something they can take away with them, “and it’s something they can understand, that’s the key”.
