Financial Advisors – are we playing well with others?

Let us visit a virtual school playground in our minds and study the individual behaviour within the whirlpool of the boundless noise and energy coming from the kids.  Let’s see if we can spot the emotionally intelligent ones.  Chances are that those we select will be those who play well with others.  They are the ones who are happy to let the friend go first, who comforts an injured kid and often reaches out to the new kid and the one sitting alone.

Financial advisors mostly take the lead on the client engagement in the financial services industry and are therefore at the very forefront of the client experience.  They determine whether a client is experiencing a single-minded sale or an emotionally intelligent service.

Many financial advisors will attest to the fact that when markets go up and investments do well, it’s often said to be a function of the markets and when things turn for the worse, the blame often find a resting place on the shoulders of the financial advisor.  Unfortunately, this comes with the territory; however unfair it might feel.

Likewise, when the administration of Deceased Estates takes years or SARS hits a client with a heavy tax bill, it is once again the financial advisor who has to take the beating by the client despite these factors being well beyond their control, or is it?

Smart financial advisors instinctively know that one way an advisor can secure a long term relationship with a client (and later with their children ), is by them being relevant to almost all the aspects of a client-families’ financial life and lifecycle – including matters where they are not necessarily experts.

This is where emotional intelligence enters the picture and differentiates between the immediate gratifications of the salesman and the broader insight of the advisor.  Playing well with others to the benefit of a client or client’s family allows for colleagues and experts in other areas to add deeper value to a client family without disrupting the primary relationship the advisor has with them. This is especially true for Fiduciary Services –where there is a need for truly understanding the complexities that each unique client scenario offers.

Wealth Succession’s team of Fiduciary Specialists provides just this, by playing extremely well with others.   Because we specialise, we continuously develop an arsenal of knowledge and solutions and place it at the financial advisor’s disposal to support and supplement their offering to their clients.  No client ever becomes a mere ‘referral’ where the advisor loses control over the development of the narrative.

A typical sale pitch would for instance be to inform a client that all Life Policy products that have nominated beneficiaries linked to them, fall completely outside the client’s estate, which results in a saving of executor’s fees and estate duty.   Well, not quite.   Often an advisor is left red faced in front of a family when they learn that the policy – which was sold as the ultimate exclusion product – is fully estate dutiable and, to make matters worse, having executed a life policy in the wrong way, not only created unwanted tax results, it may result in an enlarged liquidity shortfall – the very problem it was meant to solve.

Where a life policy pays out directly to a nominated beneficiary, it does not provide liquidity in the estate, but could result in an increased estate duty bill.   The net result of this is that the executor will have to deal with an even higher cash shortfall.

Where there is a cash shortfall, someone has the unwanted privilege to have one of the following conversations with the heirs:

  1. The estate cannot be finalised, and you will never receive your inheritance.
  2. You must pay money (that you already spent) into the estate to get whatever is left in the estate.
  3. You must pay money (that you already spent) toward estate duty, so that your stepmother can receive her inheritance.

If the executor is having this discussion, there is little doubt who will be blamed.  And in contrast to being the innocent victim of tumultuous markets, this one would unfortunately be fair criticism.

The described scenario will result in a loss of trust in not only the individual advisor, but in the industry as a whole.  Regrettably the experience of ill-considered advice will have an effect on the future decision making of clients, especially when deciding to engage with a financial professional or not.

The privilege of leading the client engagement comes with the duty to accept responsibility when financial products provided creates foreseeable issues during the administration of a deceased estate.

Doing the maths and following sound processes when considering providing financial solutions to clients is really not negotiable anymore these days.   The four-silo approach to estate planning provides an almost fool-proof method of ensuring that advice given will be accurate and appropriate.

Only once you know exactly what your client owns and in which Asset Silo it falls, can you do the necessary calculation to determine where the pitfalls lie; what the correct amount of insurance is; who the preferred beneficiary will be and how the Executor will be able to administer the estate in the shortest amount of time, with the least amount of hick-ups.

Not familiar with the 4 Silo Approach?  Click through to our website right now or set up a chat with one of our Team Members today.  No client expects an advisor to be the Master of All.   They are drawn to an advisor because they trust that the advisor will know when to bring in a specialist who can add a different perspective or insight.  It does require the ability to play well with others and allow them to deploy their specialist skill and knowledge via you to your clients.

In doing this, perhaps for once, you get to bask in the glory of advice that was executed perfectly to plan, without having to do it all on your own.


Written by Seugnette Schwim

Wealth Succession Fiduciary Specialist


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