Daniel Brockley

Oct 04, 2022

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How financial advisors can add value in a bear market

It’s officially a bear market, now what? How advisors can add value when times are tough

It’s brutal out there. After riding the sugar high of the pandemic, client portfolios – and probably your own portfolio as well – have found themselves in miserable hangover territory. The S&P recently hit a two year low and the Dow, not to be outdone, touched a yearly bottom as well. Instead of celebrating portfolio windfalls with your clients, you’re likely having some difficult conversations.

But as challenging as these times are, there’s opportunity here.

The current climate is the perfect chance to show the value you can bring beyond managing your client’s stocks, bonds and funds. It’s a time when you can further cement your relationship with your clients as a trusted advisor who is there for the long haul–for this generation and the next. You can help them shape their legacy.

Few things in life are as personal as legacy building. In essence, a client’s legacy is what they will pass on to future generations. A person’s legacy goes beyond the monetary realm. It’s how their life is remembered by those left behind. It’s the wisdom they’ve imparted and lives they’ve touched. But their legacy is also reflected in how they continue to support the people and causes that are important to them after they’re gone. And that’s where you come in.

Helping your client build their legacy right means understanding their core values, their relationships with family and friends, their hopes, their fears. It means having a perspective that looks beyond your client’s own lifetime and into how they will help shape the future of generations to come.

We like to think in terms of the “living legacy” because a person’s legacy begins when they are alive, and is impacted by the decisions they make today, with you. This legacy conversation can be a turning point in your client relationship, moving from a wealth advisor to a trusted counselor and confidant. And setting you apart from other financial advisors.

Crafting a living legacy through estate planning

For a financial advisor, the building blocks of client legacy building come in the form of estate planning. It’s an arena that many financial advisors summarily pass off to estate attorneys, but while estate attorneys certainly play an important role in the estate planning process, you can add incredible value to your clients by guiding the process and partnering with an estate attorney to assure compliance. You will also set yourself apart from other financial advisors, many of whom don’t offer this essential service.

Step #1: Start the conversation

Although it may seem intimidating at first, because you’re dealing with weighty topics around end-of-life, starting the estate planning conversation doesn’t have to be complicated. After you’ve given your client that needed perspective on the market and balanced their portfolio, you can simply tell them that you want to make sure that they and their family are set up for the future, and ask if they have an estate plan. If they say yes, delve a little deeper to learn the extent of their current plan and when it was created. If they say no, emphasize the importance of having a plan in place. It will provide security for their family – and can also save them significant money in the long run with advanced estate planning strategies and by keeping the estate out of probate.

Step #2: Do an inventory of core documents

To begin the estate planning process, you’ll want to do a basic inventory. What estate planning documents do your clients already have? Where are the gaps? Have your clients gather up all of the documents so you can get a more complete picture.

Here are the core documents you’ll want to address first:

• Will

• Trust

• Power of Attorney

• General Assignment of Assets

• Healthcare directives

Step #3: Conduct an estate planning review

Once your client has gathered all the existing estate planning documentation, you’ll want to review them with your client. How long ago were they created? Have your clients long term goals shifted? Do they still live in the same state? Are the fiduciaries, trustees and beneficiaries still appropriate? Which documents need to be updated or created anew?  You’ll want to make sure to address major financial milestones such as IPOs, selling businesses and powers of attorney for kids turning 18.

Step #4: Build a new estate plan

Once you have an understanding of the current state of your client’s estate plan and what needs updating, you can build an updated estate plan that includes all of the core documents above. Once these documents are completed, you’ll want to schedule a time to walk through them with your client, to provide a more holistic view of how their legacy is shaping up. You’ll also want to set the expectation that estate planning isn’t a “one and done” process – it’s an area that needs to be constantly readdressed as your client goes through life changes. Set up a cadence of yearly estate planning meetings to ensure the plan is keeping up with their life.

Use technology to save time and improve the client experience

While you can help clients create these documents manually, that approach is time consuming, and doesn’t scale if you plan on offering estate planning to your entire client base. The manual documents are also a confusing tangle of legalese to the average client. With just these documents to look at, clients can leave the experience more confused than illuminated.

Vanilla not only streamlines the document collection process (through simple onboarding and document abstraction) but also allows you to present the discovered opportunities, and holistic legacy plan, to your clients in a visual way, with charts and diagrams that make the plan easy to understand. With Vanilla, legacy building can turn from an exercise performed once and set aside into an ongoing conversation with your clients–expanding your relationship and ensuring their legacy continues to reflect their goals and values now and in the future.

Interested in learning more about how Vanilla can work for you and your clients? Let us give you a demo.