Client legacy planning is good for business
The role of financial advisers in ensuring that their clients have an up-to-date will in place was under the spotlight this month, as FAnews teamed up with Sanlam Legacy to run a series of insightful articles on the latest Sanlam Legacy Wills Survey research report. Today’s newsletter consolidates these articles into the most comprehensive view of the South African wills landscape as you are likely to find online.
A hole in your holistic plan
In The state of wills in South Africa, readers learned about glaring gaps in one of the most fundamental aspects of personal financial planning: drafting a will. A survey of more than 1000 South Africans from different income brackets and age groups revealed that while 98% of respondents wanted to leave a financial legacy when they passed, only 39% had a current, up-to-date will. Financial advisers and planners find themselves at the frontlines of the struggle to address this worrying statistic.
Sanlam Legacy leveraged their latest Wills Survey to better inform financial planners around why clients are so reluctant to draft a will. Emotion and financial behaviours took centre stage here, with people’s perceptions of wealth creating a heavy skew between rich and poor. In fact, the top reason for not having a will is that respondents believe they do not own enough to warrant it. Overall, the survey found that higher-income groups are more likely to have wills, though there are gaps across all income brackets.
“The research shows that the idea of having a will is widely accepted and prioritised,” wrote Sanlam Legacy. “However, the emotional weight of thinking about one’s own mortality, good old procrastination and a lack of a sense of urgency when it comes to estate planning mean drafting a will is perpetually left for another day.” More than three-quarters of respondents said they would approach a financial adviser for information on wills. This means the percentage of people drafting wills is constrained by the percentage who have an adviser or planner.
The first article in the four-part series concluded that despite a preference to engage with advisers when drafting a will, only a small percentage of respondents have that conversation. Financial advisers must rise to the challenge by guiding clients through emotional decisions, helping them understand the implications of dying intestate and showing them how wills fit into the bigger picture of leaving a financial legacy and building intergenerational wealth. Your challenge, should you accept it, is to help normalise conversations around drafting a will.
The link between wills and property ownership
The second article in the series was published on Youth Day. It sought to use data from the latest Wills Survey to answer: Why many clients still don’t have wills? Some of the reasons stem from South Africa’s economic and political realities. For example, those earning more than R35000 per month or who own property are more likely to have a will. There are also significant skews across race groups, with White South Africans more likely to have a will than members of other groups.
“The disconnect between belief and action lies at the heart of South Africa’s lack of solid estate planning, and financial advisers are perfectly positioned to shift the dial,” noted Sanlam Legacy. They said that financial advisers play an essential role in getting clients to follow through on important financial decisions. To begin, you will have to help clients through their emotional and life stage related objections to drafting a will. You must also counter clients’ mostly psychological objections about the cost of drafting a will, their lack of information on the topic and their perceptions about personal wealth.
“By proactively raising the topic, especially during key moments in clients’ lives, financial advisers can make estate planning feel more accessible and like a natural next step,” Sanlam Legacy wrote. You might, therefore, raise the topic of protecting dependents and loved ones when your clients get married, have children, purchase a home or make other significant investment decisions. Try to make the conversation about care for loved ones and the transfer of their financial legacy rather than death and dying. People need a nudge from their trusted adviser to get them to act.
In advisers we trust
Moving on to an article title that every financial adviser will love: In advisers we trust; legacy planning starts with you. This piece leads with the already-mentioned finding that three-quarters of survey respondents will turn to their financial advisers as first port of call for information about wills. In light of this finding, you should be able to approach client conversations around estates, intergenerational wealth and wills without feeling any discomfort. Through these discussions, you can focus on the role of estate planning in protecting dependents and loved ones.
Respondents to the Sanlam Legacy Wills Survey are wholly committed to protecting their intergenerational wealth with 72% wanting to leave their kids better off; 71% keen to leave the legacy of financial security; 61% to securing their dependents’ education; and 51% naming ‘generational wealth’ as a priority. There were plenty of ‘feel good’ observations from the survey too, with respondents hinting that financial advisers and planners were their confidant and guide to complex life decisions.
This explains why 61% of survey respondents who did not have a will in place would choose their financial adviser to assist them compared to 54% who would go to their bank and 37% who would approach a large financial institution. Fascinating observations. Advisers can accommodate two of their client’s three preferences by offering advice on the Sanlam Legacy solution set.
The insurance giant shared some Wills Survey statistics that could pave the way for adviser-client discussion on wills, including that 17% of respondents were unaware that their parents had wills; that 57% believe getting a will is the right thing to do, and that many are waiting to draft a will when they have more assets. The clear message should be that your clients do not need to be wealthy to have a will, they just need to care about what happens to their loved ones when they pass away.
Common barriers to drafting a will
In the final article in this four-part series, Sanlam Legacy addressed some of the common barriers to drafting a will. Getting people to draft their wills remains a common challenge faced by financial advisers and financial institutions. “Despite all the awareness we raise, and the trust clients say they have in their financial advisers, many still say they ‘will not act’ when it comes to drafting their last will and testament,” Sanlam Legacy wrote. To overcome this, financial advisers need to reframe the barriers that their clients raise.
The reasons given by survey respondents for not having a will can be easily dismissed. For example, 60% would consider drafting their wills when they owned more assets; 18% simply had not gotten around to it yet; 16% said they did not know enough about wills; and 13% believe they can’t afford to draft a will. As the insurer notes, these responses demonstrate a lack of knowledge, highlighting an opportunity for financial advisers. They suggest reframing the ‘last testament and will’ discussion by focusing on protecting children, preventing family conflict and creating a roadmap for the legacy they want to leave behind.
You should also do what you can to simplify the process. Consider how much more effective your conversations could be if you showed clients that a will can be completed in under an hour, at no cost; that it forms part of their existing financial planning relationship; and that they will be supported and guided at every step. “Wills remain the domain of people perceived as privileged; we need to shift this perception to break the perpetuating cycles which see families battling financially without the guidance and continuity a will can provide,” concluded Amrith Bishoon, Executive Manager of Sanlam Legacy.
Wills are for anyone and everyone
He added that wills are for anyone and everyone; they remain the best way to make sure your clients’ last wishes are carried out. “A financial adviser can help mediate these conversations and create a will that reflects your unique circumstances,” he said. Readers who are interested can explore the Sanlam Legacy Wills Survey research report and accompanying content online.
Writer’s thoughts:
The statistics suggest clients seldom see drafting their will as urgent. How do you raise this sensitive issue in adviser-client conversations, and should the process be driven alongside single-needs advice interactions? Please comment below, interact with us on X at @fanews_online or email us your thoughts editor@fanews.co.za.
