What Role does a Financial Advisor Have in Estate Planning?

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Does a Financial Advisor Have a Role in  Estate Planning?

Yes – a financial advisor has a role in Estate Planning. When forming an estate plan, financial advisors have a crucial role. The advisor is focused on the client’s finances, and you can help prevent important financial information and procedures from slipping through the cracks. Let’s explore some important aspects of their role in the estate plan and how you can help clients plan for retirement and beyond.

Although a financial advisor plays an important role in the entire estate planning process, here are some of the most vital areas. The advisor/planner spends time clarifying goals and objectives, and then assists in the development of your personalized vision. Additionally, they spend time guiding the planning process. He or she may assist in the gathering of information, and organize that information in a format that is useful to all the team members.

Once data is verified, the advisor will seek to find inconsistencies within the existing plan and begin discovering the “gaps” of those problem areas that are not consistent with your vision.

Once areas of concern are identified, the advisor will collaborate with the advisory team to verify the appropriateness of the suggested recommendations. Upon agreement, the financial advisor will often guide the implementation process with the other advisors until the areas of concern are satisfied. (Sometimes the process is guided by the attorney.)

Thereafter, the financial advisor will help monitor the plan and make appropriate recommendations to make sure the plan is meeting the goals set forth during discovery and implementation.

What questions should I have for a financial advisor when I interview him or her?

What are their credentials and experience in financial planning? Do they or anybody in their organization hold the CFP® or other designation? Are they licensed to sell securities? How many years have they been practicing financial planning? Does the financial advisor follow a process when developing a financial or estate plan? Financial and estate planning is a process of gathering information, reviewing the data, finding potential weaknesses, implementing the recommended changes, and providing ongoing monitoring of your progress.  It is essential that your advisor has a process in place.

Both estate planning and financial planning are a means to a happy and safe future. Despite its necessity, more than half of the U.S. adults have not organized their estate plans, and even those who have an estate plan have several loopholes, increasing the chances of probate. According to a survey by Caring.com, the number of people (in the age group 35-54) with a will has gone down from 37% in 2019 to 22.5% in 2021. Only 44% of people above 55 have a will in 2021, which is a reduction of 16% from 2019. The survey also specified that despite the COVID-19 pandemic, the estate planning numbers have not improved. Even though people understand the importance of estate planning, they have not taken any productive steps in this direction. One of every three participants said COVID-19 made them realize the importance of estate planning, but 31% of these people did not undertake any estate planning measures.

To ensure your financial and estate planning is failsafe, it is advisable to consult a financial advisor who can offer expert guidance in financial planning matters.