Category Archives: Wealth Mgmt

Canadians are stressed about money

Canadians are stressed out about money

Money stress is the leading source of stress among Canadians

Money stress is causing significantly more stress than work, personal health and relationships according to a Financial Planning Standards Council (FPSC) survey released today.

The findings are being released in conjunction with the 6th annual Financial Planning week (November 16-22) during Financial Literacy Month (November)

The FPSC survey finds that financial stress is driving Canadians to lose sleep, reconsider past financial decisions, argue with partners and lie to family and friends about their personal finances.

Canadians’ experience financial stress to varying degrees depending on age, gender and openness to discussing personal finance issues.

Here are the key findings among respondents across the country (excluding Quebec):

  • A significant number of men and women lose sleep over financial worries (51% of women; 40% of men);
  • 45% of Canadians are embarrassed about their lack of control over finances;
  • Millennials are more likely than any other generation to lie about personal finances; 33% admit to being dishonest with friends, 25% with family and 15% with co-workers (compared with national averages across all age groups of 17%, 14% and 9%, respectively);
  • 87% of Canadians wish they had made better financial decisions earlier in life;
  • Four in 10 people in relationships with shared finances argue regularly over finances; and
  • 1/3 of Canadians believe that, on average, their friends are in better financial shape than they are.

You can learn more of the details here

What’s the answer?

According to Cary List, the President & CEO of the Financial Planning Standards Council, the FPSC wants Canadians to know that engaging in financial planning with a qualified professional can help enhance both their financial and emotional well-being,

“We urge everyone to source  a CFP professional on our Find a Planner tool at www.fpsc.ca and discuss their situation, goals and financial needs.”

The founder & CEO of LegacyTracker is a Certified Financial Planner and a member of the FPSC.  One of the primary considerations for building LegacyTracker was to enable individuals & families to become more empowered with their own financial/estate information enabling them to become more proactive with financial/estate planning.

Get ‘engaged’ with a Certified Financial Planner today. It’s easy with the Find a Planner tool provided by the Financial Planning Standards Council

Perfect storm in the financial services market

A Perfect Storm ?

A Perfect Storm in the financial services marketplace for a personal financial management (PFM) tool 

It certainly feels like a perfect storm is unfolding at the moment that we think provides an opportunity for financial organizations & professionals to provide clients with a personal  financial management tool offering a Win/Win benefits.

The challenges are many:

  • Demographics: Aging/Sandwich Generation/Smaller families
  • Demographics: Increased longevity/Rise in incapacity
  • Increasing need for enhanced financial literacy
  • Increased risk related to Inter-generational wealth transfers ($41 Trillion)
  • Push to ‘paperless’ reporting
  • Increasing Complexity of personal finances/impact on executing estates
  • High levels of personal financial stress impacting productivity in the workplace
  • Increase in the number and impact of natural/physical disasters highlighting the need for emergency preparedness
  • The need to differentiate in the marketplace due to fierce competition
  • Higher expectations from clients to show value for fees
  • An alarming rise in the balance of unclaimed financial assets ($63 Billion)
  • Increased appetite for technology tools particularly from younger generations to manage their financial lives
  • Continued procrastination on the part of individuals & families to have important conversations about estate planning/final wishes

A little organization can make a BIG difference.

LegacyTracker helps clients simplify, safeguard & share their important financial & estate info, documents & to do’s with loved ones and/or advisors.

Better Organized Clients are Better Clients.

LegacyTracker can provide a Win/Win solution for Organizations:

  • Enhanced Loyalty/Retention/Referrals by demonstrating Customer Advocacy
  • Better Differentiation in the market
  • Better Insight into the challenges & needs of clients for products & services
  • Improved engagement/collaboration with clients (“Do More”)
  • Reduced costs related to marketing/on-boarding
  • Increased Revenue/Profit

We think that all leads to Increased Revenue/Profit on your bottom line with happier clients

Get in Touch/Connect for the details

 

Worries of the Wealthy (HNW) in 2014

 

US Trust 2014

The 2014 version of the U.S Trust Annual Insights on Wealth and Worth was recently released. The annual survey provides insight on the wealth management challenges confronting high net worth and ultra high net worth individuals in the US.

High Net worth is defined for the purposes of this survey as being $3 Million or more in investable assets. The 2014 survey sheds light particularly on the growing challenges and needs that come with more complex family dynamics including multi-generational and extended family situations. Worries of the Wealthy.

Some highlights that we found particularly interesting and some of the challenges that LegacyTracker can help with….

The Top 5 risks to family wealth

Divorce, Addictions, Untimely death or disability of a primary income earner, medical problems  and disagreements over inheritance or distribution of family assets

Family circumstances US Trust 2014

“The modern American family is more diverse than it once was, adding to the challenges of wealth management for high-net worth investors and their advisors. Changing family structures and roles among multiple generations of immediate and extended family members affect the way family members interact, communicate  and manage their wealth”

Ranking the most important reasons for having an estate plan

US Trust 2014 Reasons for Estate Planning

How important are Financial Legacies ?

While 60% of those surveyed thought it was important that they leave a financial legacy, 96% of wealthy parents are concerned that their children will be mature enough to receive an inheritance until at least age 25 and 37% think the ideal age is between 30-34. That might explain why only 38% of wealthy parents have fully disclosed their financial status to adult children over age 25.

Executor choices

Perhaps some troubling challenges on the horizon?

  • More than 3/4 of those surveyed have named a family member or friend as executor
  • Most often, individuals name their spouse as an executor but…
  • Nearly a quarter of those surveyed had not yet chosen an executor or trustee
  • 22% have not named a trustee because they have not established a trust

Families and Friends as Executors US Trust 2014

Few consider capacity of executors

Executor challenges

There were many challenges noted by those that have served as an executor or trustee. The 2nd biggest challenge cited was…having access or knowledge relating to where the records and important information was kept.  We would suggest that this issue adds to the biggest challenge noted being, the time commitment of time require to execute a will. Time is money and time can also add to the grief already being experienced in the case of a loved one who has been named as executor which happens a majority of the time even in high net worth families.

 

US Trust 2014 Survey on Executors

Yes. LegacyTracker can help with some of these challenges; important documents & information is critical & so is the sharing of that information as required. Our built in alerts & reminders are all about ensuring that the proper documentation & information is safeguarded.

 

Read the full US Trust Survey US Trust 2014 survey on High Net worth individuals

 

 

US Banking survey

Banks are searching for revenue growth and technology to deliver it

Building revenue is a critical priority for the Banking Industry

The above statement may not perhaps be BIG news in most industries but it is in US Banking. That’s because the emphasis in the US Banking industry is now in high gear after years where the priority (after the financial crisis) was all about managing risk, cutting costs & meeting regulatory requirements.  But now it seems, the focus or refocus is on Revenue Growth in a big way and they are turning to technology to help deliver better relationships with clients & account holders who will help their revenue grow.

The KPMG 2014 Banking Industry Outlook Survey of 100 senior banking executives reports that revenue growth is expected to be delivered by concentrating on relationship building & technology investments that provide better customer experience(s).  

Building better relationships with customers is key to exceeding customer expectations & driving revenue.

  1. Keep customers at the heart of decision-making
  2. Maintain a dedicated focus on understanding customer needs in various customer segments
  3. Deploy an omnichannel approach that offers superior and consistent client experience

The KPMG survey also highlights the areas where most US banks will look for this additional revenue growth. There is a clear eye on wealth management and lending. That means the wealth management sector is going to see competition really heat up.

 

2014 KPMG Banking Survey

Here’s the survey for your reference KPMG_Banking Industry Survey 2014

 

LegacyTracker

Personal Financial Management tools offer big benefits

Banks already know:

Personal Financial Management tools offer BIG benefits …

Other financial service providers can benefit as well

An article recently from Finextra notes that the number of banks adopting Personal Financial Management (PFM) tools to their clients has doubled in the last 3 years.  Why are banks adopting personal financial management tools and what kind of justifications are there in choosing a particular PFM ? A study of a large number of banks highlighted the following 3 benefits for offering personal financial management tools to clients:

  1. Banks want to defend their market position. Banks see PFM as a tool to differentiate their brand & create a new valuable service for their customers
  2. Banks want to increase customer satisfaction, to create loyalty and retention-Banks see the convenience, control & simplicity & organization that benefits their customers. PFM can help customers succeed in achieving their goals (that’s good for everyone)
  3. Banks see PFM as a strategic tool for revenue generation-PFM creates cross-and-up-sell opportunities and provides the marketing staff with better insight into customer needs

The author of the study sums up PFM as being a lucrative revenue generator.. We agree. But it’s a Win/Win offering with a lot to offer users & providers.

Read more from the Finextra article by Artak Vardanyan of Misys  here 

LegacyTracker helps consumers and clients simplify, safeguard & share their important financial/legal and estate information & documents. LegacyTracker helps provide a 360 degree view of finances with reminders & alerts for what needs to be worked on next. In this way, LegacyTracker is a personal financial management tool & can deliver the benefits noted in the article (plus some others).

PFM Offerings should not just be exclusive to Banks 

The benefits of offering a PFM to clients or account holders is not restricted to banks. Wealth Management firms, Credit Unions, Asset managers, Professional service providers like lawyers/Accountants or Estate executors or Member Based organizations have much to gain when clients are better organized, less stressed and more engaged with their financial/estate information.

Connect with us to learn more

 

Inter generational wealth transfers

Preparing for wealth transfers in the trillions – a strategic imperative

It’s a lot to lose

The looming inter generational wealth transfer may receive much attention in the news but how much real preparation is taking place in the financial services market for this transfer? Not reaching out to the spouse, or children & grandchildren (heirs) of existing clients presents a real risk. Bank of America in 2011 noted that assets transferring to a spouse move to another firm 55% of the time while assets transferring to children move as much as 98% of the time.  Bank of America aptly noted the strategic imperative of reducing the risk of inter generational wealth transfers; “a very real risk of long-term erosion to their business

How much ?

Life expectancy, rising health care costs , changing tax legislation and increasing debt levels aside, the estimated value of Inter generational wealth transfers over the next many years is in the Trillions and comes by way of 2 different phases.The so-called “Great Transfer” is an estimated $17 Trillion + that is expected to shift between the “Greatest” generation to Baby boomers. A 2nd shift  (“Greater transfer“) is another $42 Trillion + that is expected to move from Baby Boomers to Generation X.  Added together or alone, these transfers present a high level of risk for financial advisors/firms to lose assets. An estimated $30 Trillion of this total of $59 Trillion is expected to shift in the next 30 years.  During the peak of the wealth transfers taking place (between 2031 to 2045) it’s estimated that 10% of the Country’s wealth will change hands every 5 years.

Where’s the risk?

Estimates vary based a lot on wealth and income but most studies indicate that too few families (less than 35%) have discussed estate planning with their primary financial advisor. Why don’t more families take the time to discuss and prepare? Certainly, the myth of estate planning only being for the wealthy continues to prevail but so does procrastination and the ‘discomfort” of the topic generally.

At the same time, why are financial advisors not more actively engaging with clients & their heirs about estate planning matters? Some evidence suggests that most advisors happen to be Baby boomers themselves and feel that they lack effective ways to both reach out to the children & grandchildren of their clients and engage proactively with clients to establish multi generational wealth transfer plans. That’s not good (!) Estate planning discussions provide great value to clients, their families and financial advisors.

Engage/Do Good/Enhance Value/Retain

Research shows that at least 60% of inter generational wealth loss is caused by poor communication and a lack of trust within the family. Encouraging clients to talk with their family members about their expectations and values before the estate planning process begins is a meaningful way to provide value. We’ve written about the idea of Ethical wills over and above traditional will planning in other posts on this blog. (We provide a place for both in LegacyTracker)

Coordinating family meetings provides a great way for advisors to introduce themselves to the next generation and show that they care. Clients appreciate an advisor that cares and demonstrates customer advocacy on a regular basis & so will the families of those clients.   By offering a technology solution that helps clients simplify, safeguard and share their important financial, legal and estate information, financial advisors and firms can demonstrate customer advocacy to the entire family. Being organized will make a real difference for an entire family in enhancing their level of emergency preparedness.  Our branded solution can ease the potential burden on a family should an emergency arise; reducing the risk of additional grief, delay or cost that often comes when families are unprepared.

LegacyTracker can also help facilitate important discussions between both Advisors & Clients as well as between Clients & their family members about important estate planning matters including final wishes. Such discussions will enable Clients and their families to more proactively prepare for the next generation & and will enable financial advisors and their firms to show additional value.

That’s a core mission behind LegacyTracker –  providing a way for Financial Advisors/Firms to reach out to their Clients/Families which also helps those Financial Advisors/Firms to ultimately hold on to assets that might otherwise move. LegacyTracker is also a technology solution that will have particular appeal to younger clients or family members who are on the look out for a technology to make their lives less complex & more mobile.

Customer Advocacy beats Free Coffee

Of course, I`m a bit biased since I have never actually tasted coffee (Long story involving a pact made with best friends when we were 7).

However, there is a lot of talk about Customer Advocacy of late and the impact that being a Customer Advocate can have on confidence and loyalty (retention) for providers. Loyalty…is priceless it leads to retention, praise, cross selling, referrals etc.

Partnering with customers on managing their finances, making them feel confident about their financial future, and taking the lead when necessary helps them see that you are on their side and looking out for their best interests,” so says Beth Youra, Senior Consultant for Gallup.

This comes by way of a Gallup survey reported in April of 2014:  Banks: To Earn Customer Confidence, Make the Conversation About Their Financial Well-Being

”This manifests itself in customers feeling like you are looking out for their financial well-being, which, in turn, makes you seem more selfless and gives customers the confidence that you are in it for them and not yourself.”

Wise words. Loyalty is hard-earned. LegacyTracker, our branded personal financial organizer can help your clients simplify, safeguard and share their important financial/legal/estate information with loved ones and advisors. We think that’s better than free coffee or even a toaster.

 

 

Safeguard your family

Safeguard your family from What If scenarios

Talking about Money has historically been considered as “UnFun” but these days it’s critical. What’s even less fun than taking about Money? Money and Death.     Yes. Thinking through all of the unpleasantness that comes with death is considerably UnFun but being unprepared for a sudden or unexpected death in your family is even more so.

Statistics indicate that women will often outlive their husbands but that’s not always the case. We all know Stuff happens & that includes BAD Stuff. That’s why it’s important that each spouse take an active role in their household/family finances and know where stuff is and what they have.

Others have talked about this in their columns or blogs like the Blunt Bean Counter in his blog post “Stress Testing your Spouse’s Financial Readiness if you were to Die Suddenly” and Roma Luciw in her Globe and Mail Article Why you should stress-test your finances for a sudden death 

The bottom line is about safeguarding your family from additional grief & expense in an already stressful time by ensuring that both spouses have all the important information necessary to manage through such a time.

Let me say that I’m quite familiar with the kinds of scenarios that can occur when a death happens. As an Accountant, I have helped many overcome all sorts of challenges that have been brought about by an untimely death of a loved one (not that there is such a thing as a timely death)

I’m also quite personally aware of the stress that comes from being the “CFO of the family“. That would be the spouse that manages & holds all of the important details relating to the lives of your family. Your family might work that way as Lots of families do: One spouse is the CFO & manages all of the important financial/legal/estate paperwork & the other spouse operates (sometimes blissfully) unaware of all of those important details behind your household finances. It’s not a good position to be in no matter which role you have. As the CFO in my family, I still worry that my spouse is not going to know where everything is and whether he will “leave money on the table” It’s a pretty UnFun responsibility to be the one solely responsible for the “info”.

And now you know some of my personal secrets & some of my motivation behind LegacyTracker. it’s about ensuring that my family and yours have their important details of living life documented, safeguarded & shared with those who need to know. Details like:

  • Where the will and power of attorneys are
  • Having a readily available & accurate list of assets with account numbers & contact information
  • Having a current and comprehensive list of passwords for your digital assets and non-digital assets
  • Knowing the location of important legal agreements like income tax returns and real estate deeds
  • Knowing exactly how much insurance you have and who are your insurance contacts
  • Having the opportunity to write and share details about your final wishes/arrangements

Nothing can be left to chance.  It’s up to each of us to safeguard our financial legacies and that’s how LegacyTracker can help. That’s what we’re about.

 

Help clients simplify finances

Trusted Advisors help Clients Simplify Finances

Good article from Tessie Sanci of Investment Executive this past month

Be the Key Advisor for your Key Clients 

“Your high net-worth clients are looking to simplify their finances and their lives. Finding a trusted advisor can help to co-ordinate all their financial affairs – and make life easier.”

Life is BUSY. We think ALL clients are looking to simplify their financial affairs.

In this article, Tessie refers to the David Maister, Charles H. Green & Robert M Galford book…”The Truted Advisor” where the authors outline what they see as various levels of Advisors providing professional services. I read this book many years ago when building up my accounting firm & yes it made a difference. The opportunity is there in many professions to become more than simply a vendor who performs the required and needed tasks related to his or her profession. A Trusted Advisor however, is one that becomes a “valuable resource” that can be consulted on strategies not solely related to the advisor’s specialties.

Giving in order to receive (eventually)” helps build client trust. Becoming a resource for your clients helps build their trust and helps them simplify their lives. That’s valuable. Sanci quotes Francis Sabourin who is an advisor with Richardson GMP Ltd. in the article ” It’s a good way to show (clients) that I care…It’s not always about investments” 

LegacyTracker is also a resource for clients as well.  Our online solution helps your clients simplify their busy lives by having one safe place to simplify, safeguard & share their important financial, estate & legal details from.

Read the entire article here  from Tessie Sanci in the Investment Executive

 

 

Canada's Financial Services Sector

Canada – A robust but confusing financial sector

Behold Less Bewilderment 

Thanks to H2 Central for the great infographic Canada’s robust financial sector my seem a little less confusing. H2 Central published their helpful infographic last week which they indicated, came about from “periodic encounters with clients bewildered by the intricacy of our respected but complex investment sector” 

Indeed. It’s a robust sector and challenging to grasp; full of regulators, financial literacy organizations, educators, advisors, investment companies, investment producers & distributors some who are AND some  who are not connected. Not sure? Check out the colour codes and note the associated abbreviations/acronyms …

 

 

Logo Toaster

It’s not about the free WiFi or the toaster anymore

Personal Finance Management Tools (PFM) can help users do a lot of things these days like budget, visualize their spending or cash flow, aggregate multiple accounts, receive bill reminders and generally help them engage in more proactive financial planning.

A US BankChoice survey from May of this year as reported by The Financial Brand  indicates that currently 32% of those surveyed use a PFM service or software for budgeting & financial planning but 23% are relying on a 3rd party tool like Mint.com or Quicken to help them. With only 9% using a PFM tool provided from their bank or credit union,,,that means that there’s a BIG gap in the market as 36% of the women surveyed & 31% of the men surveyed in the same study, want their institution to provide those PFM tools.

Consumers want PFM

Again…we suggest, it’s not about the free WiFi or cappuccino in the branch anymore or the free toaster or tablet that may come with opening a new account.

Life is BUSY. Give the “People” what they want.

  • Consumers want tools to simplify their lives.
  • Consumers need insight into their own information and help managing their multiple To Do’s when it comes to financial & estate planning.
  • Consumers want to make more informed decisions on spending, saving, borrowing and investing.

The majority of financial service clients are looking to their financial service provider to show more value and to demonstrate Customer Advocacy (show that they care about them and not just the bottom line). We think that adds up fairly nicely to the WHY behind providing a PFM tool to clients (and prospective clients).

LegacyTracker is a PFM tool that can help your clients simplify, safeguard, share their important financial, legal and estate information while tracking their financial progress along the way.  Better Organized Clients are Better Clients.

 

 

 

LegacyTracker Net Worth Tracking

Net Worth/Worth Tracking

Some say Net Worth is a GOOD number to track in order to determine whether you are making financial progress. Others say it’s the ONLY number to track.

What is net worth ?

Net worth, (also generally referred to as wealth) is one measure of an individual’s material wellbeing or financial success, measured by the amount by which assets exceed liabilities or debt. And yes; it’s possible to have a negative number especially for young professionals with student debt; don’t despair.

Assets – Liabilities = Net Worth 

Why does it matter?

Knowing your net worth is an important aspect of personal financial planning. It can be a wealth strategy. Net worth can also be a benchmark for wealth or financial fitness much like your weight is a benchmark in a weight management program. It can also be a powerful motivator to save more, spend less, pay off debt or to work proactively with a professional financial advisor to map out a financial plan.to financial success.

Net worth is worth keeping track of as it also represents the degree of flexibility one might have to respond to unexpected or unforeseen circumstances like a job loss, an unexpected illness or a drop in the financial markets. A healthy net worth can also provide individuals with opportunities like starting a business or going back to school. Ultimately, retirement will also be funded by net worth. At some time in the future net worth will be utilized in order to fund retirement.and cover living expenses.

Track or Update regularly

One thing is certain. Net worth will fluctuate over time but hopefully it will grow in the right direction. Regular updates can help you keep on track with your financial goals; a financial checkup; much like going to the doctor for a health checkup. Regular updating can help ensure that savings and spending are held in check. You don’t need to be an accountant to calculate net worth; a simple excel spreadsheet or an online tool can be used. We’ve included net worth tracking as an important feature inside LegacyTracker

Compare cautiously

A growing number of bloggers now post their progress around building their net worth online for all of their readers to see. That’s one way to compare. They say it keeps them accountable. I’m an accountant; we like to keep things nice and confidential.

Easily found comparables might be the annual surveys that report the average net worth of Canadians or Americans as an indicator of financial well-being over time. For example, the average Canadian household net worth broke $400,000 at the end of 2012, which was a 5.8% increase over 2011; slightly ahead of the US by about $19.000.

Whether or not it is used as an indicator of financial status, tracking net worth can be motivating and so keeping it updated on a regular basis and making sure you are making progress, is a positive move. I have found too many clients who are so focused on the estimated value of their assets (say the growing estimated value of a home in Toronto for example), that they don’t take into consideration the growth of their debt over time.That’s the advantage of tracking Net worth as opposed to Total Asset Accumulation.

It’s the NET and the NET movement in financial progress that matters over the long-term for you and your family. That’s the reason we included a Net Worth tracker in LegacyTracker.

Age of the Customer means it’s about ‘them’

I thought a recent article by Aldo Cundari (of Cundari) was worth passing along and summarizing,. Although his article “How Did we get to the Age of the Customer is tag lined with “how digital turned talking to consumers on its head”   so there’s your clue

How did we get to the Age of the Customer?                  (because yes we are there)

Aldo attributes the evolving state of marketing that happened over the course of the last few years to the age of digital where all consumers can now do their own research on what they want  and research reviews & options like never before. That makes “Shopping Around” quite different and that makes marketing products & services a lot different too; not to mention some additional BIG challenges like social media, hyper competition, product proliferation and globalization added in to the mix.

So, if we are shopping differently now, (becuase this does sound a lot like the way I shop), .then..the question becomes more about…

How to best serve those potential Customers when they arrive and ask their final questions to ensure they do become your Customers…

Indeed, the customer is empowered now like never before with information in order to purchase. Whereas, 10 years ago, it was more about the Information Age, it’s now evolved into the Age of the Customer. They’ve got the info  which has lead to the disruption and change in the way consumers behave, purchase & engage and because of that, they have higher expectations. The consumer is driving now and leading and he warns, Organizations who ignore this shift will suffer.

Here’s the difference of the Past vs the Present as Aldo Cundari has presented it:

The past:  

aldo 2

 

 

 

 

The present:

 

aldo 3

 

 

 

 

I like how Cundari summarizes what all this means: now that the Customers are in the driver’s seat as he says:

Marketers need to re-evaluate their approach and look deeper to understand, empathize and help customers meet their needs through their new purchasing and decision-making behaviours.  I think that sounds a lot like Customer advocacy. 

We appreciate Customer Advocacy and we think your Customers will as well. LegacyTracker demonstrates Customer Advocacy by helping them meet a lot of challenges by helping them:

  • Simplify & safeguard their details
  • Become more empowered with those details in order that they can become more proactive about their Financial & Estate Planning,
  • Enhance their level of Emergency Preparedness and
  • Facilitate important conversations with loved ones & family that they too often delay.

Connect with us about LegacyTracker 

 

Read more: Strategy Online – How did we get to the Age of the Customer

 

 

 

 

Ethical Wills: An important part of a Legacy & LegacyTracker

 

The results of a 2012 Allianz Life Insurance Study may surprise you. 86% of Baby boomers (age 47-66) &  74 % of elders (age 72+) agree that family stories are the most important aspect of their legacy, ahead of personal possessions (64 % for boomers, 58% for elders) and the expectation of inheritance for financial well-being           (9% for boomers, 14% for elders).

These results do not vary greatly from their study of 2005, that indicated that family values and life lessons were indeed the most important part of legacy before financial assets. That study outlined the 4 pillars of legacy as being 1) Values and Life lessons 2) Personal Possessions of emotional value 3) Wishes and Directions to be fulfilled and 4) Financial Assets/Real Estate

An ethical will captures the non financial part of a legacy. which make for, alongside the financial assets leaving a legacy as opposed to an Inheritance. Ethical Wills are the intangible form of a legacy that can make a real difference to heirs and that’s perhaps why they are being talked about more often in recent years as part of overall wealth transfer planning. An ethical will is not legally binding or enforceable as opposed to a will or living will; it is more concerned with the sharing of principles, values , life lessons, family histories and guidelines that an individuals may want to be pass along to heirs. It can be an informal letter or a long autobiography or a book, or even a video.

A good read on the subject is by Susan Turnbull of Personal Legacy Advisors in her book, The Wealth of your Life: A step by step guide for creating your ethical will.  Ms. Turnbull’s book provides an introduction to the concept of an ethical will and lays out a 5-step path for creating a written document or recording.  Her website is also a valuable resource

From Ms. Turnbull:

“It is a heartfelt expression of what truly matters most in the client’s life….Whether a client actually creates an ethical will or not, it is a measure of value of recommending one…An ethical will opens a door for an advisor to start a bigger conversation about estate planning”

It seems reasonable that Financial Advisors who open up conversations about ethical wills may find that they are then able to better serve the next generation of their existing clients. It provides an opportunity to reach out to that next generation and reduce the risk that comes with the unprecedented intergenerational wealth transfer that has already started while doing “Good” for clients.

Overall, I think most of us understand, that we are all worth more than the money we leave behind and that’s why we have included a place for Ethical Wills inside LegacyTracker

Connect with us to find out about all of the important parts included in LegacyTracker

Here’s a sample and some additional information in the form of FAQ from John Kador’s article on Ethical Wills from wealthmanagement.org 

ethical-faq

ethical-exercises

2 BIG lessons behind Billions in Unpaid Death Benefits

Unpaid Death Benefits from Life Insurance policies are still very much in the news in the US & that’s not likely to change for a while given that investigations & law suits are still ongoing. All in all, it’s a Sad & Ugly story that includes the use, abuse & non use of the “Death Master File” & Unknown Billions of Dollars in Unpaid Death Benefits. It’s also a reminder & a confirmation of the need to safeguard life insurance policies and share the details with loved ones. 

Unpaid Death Benefits from a Life Insurance Policy

Unpaid Death Benefits

Unclaimed death benefits refers to a life policy where death benefits under that policy have not yet been paid to a beneficiary by the Insurer. In the US, where Unclaimed Property Legislation has existed for some 50+ years, Individual States have become quite ‘proactive‘ or ‘aggressive‘ with Insurers in recent years.  The use of the term Proactive versus Aggressive depends upon whether you are a State or an Insurer & it all more/less relates to the use, abuse or non-use of the US Social Security Administration’ s Death Master File

That’s the file that most State Governments expected Insurers to use to identify deceased life policy owners in a timely manner. However, too many delayed or non payments to designated beneficiaries were suspected to exist and so, a multitude of reviews have taken place over the past 2 years by both State Attorney Generals & State Insurance departments to see whether, and to what extent, insurers had failed to fulfill their beneficiary payment responsibilities. Examinations, Public inquiries, subpoenas, lawsuits and Audits have been BIG news  across the US given the Billions that have been estimated to be outstanding.

A number of States have proudly announced settlement agreements reached with various insurers. Multi State settlements often totaling in the millions are becoming the norm. No wrong doing has actually been admitted to by the Insurers; they have only indicated that the settlements have more to do with moving “things forward”

New York/New York

While actual Go Forward Guidance in the form of changes, new laws and regulations have been slow to materialize, in  December 2012, New York enacted a law requiring insurers to make regular searches of records to identify when a policyholder died and to locate beneficiaries so that life insurance proceeds can be paid.  

And, in July last year,  New York announced that its investigations, which started in July 2011, had resulted in more than $1.1 Billion in unclaimed life insurance benefits being recovered. It was determined that Insurance companies were not using the Death Master file as provided, to search  for life policies that needed to be paid out BUT most insurers were using it to determine when to stop making annuity payments. That’s troubling to say the least.

As a result of New York’s findings, it’s estimated that 100,000 individuals or families across the US including 25,000 from New York received policy benefits. The oldest claim dated back to 1960. Many of those recipients were completely unaware that there was a life insurance policy in place. That made for some emotional press conferences.

In all, $1.15 Billion in recoveries had been made to last July and $339 Million of that was turned over to beneficiaries. The difference will reside with New York State but listed on the States Unclaimed Property website for heirs to find.

It’s unfortunate that the delay in developing uniform guidelines and in providing  better guidance continues to create uncertainty for insurers & delay death benefit payouts further.

Estimates of how much money unclaimed benefits may actually represent across the US vary widely from a few Billion $ to Multiple billion $. No one can yet claim to have an actual number yet outside of describing it as BIG

This may all sound very confusing to those unfamiliar with the Unclaimed Property legislation that exists in many countries like the US (but not Canada outside of Alberta and Quebec) . Many may wonder why each State is being so very proactive.? The answer is that these investigations, audits and new guidelines have major financial implications not just for grateful beneficiaries but also to the individual states as well. That’s due to the fact that in the case of any of those unclaimed death benefits where the beneficiaries may be unable to be located or found; those death benefits will remain with the State & not the Insurer.

New developments are certain to occur shortly, but the real lesson in this story is not about the Greed which would seem to be at play here, but the vital importance of

1) Carefully Safeguarding the details of Life Insurance Policies for the benefit of those you gave consideration to in the first place by making them a beneficiary and

2) Advising those beneficiaries or those close to you about those Life Insurance policies and where the details can be found.

The best person to safeguard your legacy is You.  

LegacyTracker can help. We’ve included a safe & accessible location inside LegacyTracker to  secure your life insurance details. You can also can attach the policy alongside that information.