Three Steps to Helping Clients With Trusts

Many financial advisors build their business through traditional methods — cold calling, relying on family and friends, seminars and networking.

Once they sign a client, good advisors will spend countless hours working to provide top-quality service while building assets. A fruitful relationship for a financial advisor can span decades yet disappear in days after a client passes. Trusts are a powerful way to address the issue. 

Studies show that 90% of financial advisors will lose a client when the husband dies. Multiple clients passing in a short time frame can be catastrophic to an advisor’s career.

Common retention strategies inside the financial advisor community focus on actions to be taken after a client passes. As the statistics show, trying to establish a relationship with the next of kin can prove to be a fool’s errand.

The right way for financial advisors to ensure they maintain assets is by building emotional trust in order to recommend a financial or legal trust. 

Assets held in a trust account are far less likely to be moved upon the death of a client by an heir. Trusts can allow assets to remain under an advisor’s management for the next generation, especially when a strong relationship has been developed with the trustee.

In many states, a well-drafted trust can direct that a financial advisor manage the trust assets.  There are three key steps to introducing a trust and opening the door to client retention: timing, education and a trusted partner. 

1. Timing the Conversation

Financial advisors freely discuss tax planning with their clients yet often shy away from discussing mortality.

Asset protection should be a key goal for any financial advisor, and that includes ensuring that the wealth being built is protected in the future. Consider discussing trusts at the client’s 10-year anniversary once a track record of success has been created. 

Keep in mind that the financial advisor only needs to recommend that a client speak to a trustee; being knowledgeable on every aspect of estate planning is not necessary. An experienced trustee will be able to provide clients with peace of mind while easing them through what can sometimes be a difficult conversation.