Advisors should double down on efforts to convince clients to craft or update their estate plans, a new survey suggests.
Only about a third of Americans have an estate plan—34%—according to a survey released Tuesday by D.A. Davidson & Co. Among those with a plan, 20% have not updated it in the last five years, the survey shows.
The findings are less dire among people who have worked with a financial professional, though there’s still ample room for improvement. Among those who say they have a plan, 56% have worked with a financial pro at some point. The survey was fielded in September among a demographically balanced nationally representative sample of 2,094 U.S. adults.
More than one-third of Americans, 37%, said they didn’t have an estate plan because they didn’t think they had enough money to necessitate it. Even if they are working with an advisor, many people simply put off the process, which could leave them vulnerable, says Andrew Crowell, vice chairman of wealth management at D.A. Davidson. Notably, procrastination was the biggest factor keeping individuals who have worked with a financial pro from creating an estate plan.
That’s why Crowell says advisors need to take a more active role in nudging their clients to take the proper planning steps. This includes encouraging them to put into place a viable estate plan for their assets, as well as directives related to their healthcare and end-of-life decisions. Advisors should also be encouraging clients to refresh their beneficiary designations on an annual basis, Crowell says.
Even with the best investment advice, no plan is complete without ensuring assets are properly transferred at death and end-of-life wishes are met. It’s important for people to clearly lay out their intentions ahead of time since they won’t be there to speak for themselves, Crowell says.
Addressing healthcare wishes. Only a third of Americans have a healthcare power of attorney to make decisions for them if they are incapable, according to the survey. Those who have worked with a financial professional were more likely to have such a document, but there’s still an alarming number of people who don’t, Crowell says.
“We just came out of a global pandemic. Millions of people died,” says Crowell, offering the example of his mother who passed away from Covid-19 in January 2020. He’s grateful his mother had plans in place so he and his brother could abide by her wishes. He encourages other advisors to make sure their families and clients are similarly protected.
“It’s critical to clarify your end-of-life wishes so they aren’t open to interpretation,” he says.
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By Cheryl Winokur Munk
Published October 11, 2022