Should I rely on my financial advisor or Texas attorney for estate planning?

Bedford divorce attorney discovery rulesGenerally no. While working in the financial services industry I had the opportunity to learn a lot about investing and risk assessment. One really important lesson learned: financial services is all sales. Selling stocks, selling annuities, selling retirement plans, selling trusts, etc. The business model is straightforward: get clients in the door, bring in their assets and generate commissions and asset-based fees. Can a Texas estate planning attorney do a better job for you? Perhaps.

Today financial services businesses offer products and services that cover almost every financial product out there. Gone is the day when you went to a broker for stocks, an insurance salesman for life insurance, a bank for checking accounts, a fund company for mutual funds. Now every company offering financial services offers everything or nearly everything.

An advisor may offer you brokerage services (investing and trading securities), life insurance and annuities, checking and savings, education savings plans, trusts and anything else you might need. Insurance companies now have brokerage arms as do banks and credit unions. The goal is to build the customer relationship and get customers to keep as much money as they can with that business. For estate planning you should speak with a Texas estate planning attorney.

Retirement plan investments

I don’t have a real problem with this business model. Customers can chose to put as much of their assets with whoever they want. I even reject the argument that it somehow diminishes the quality of financial services. In the past your insurance agent thought life insurance products were the best way to prepare for retirement and take care of your family when you die. A broker thought investing in IRAs was best. Fund companies thought their mutual funds are the best way to invest. They all pitched their products to get you to turn more assets over to them.  Now your financial services provider pitches whatever combination of products accomplishes that goal.

The important message is that whenever you deal with a service provider (even lawyers!) you need to consider your own needs and goals and whether the services being offered meet your needs and goals or the provider’s goals of getting your assets in the door. Often financial services providers offer retirement planning or investment planning which is really just a mechanism to get you to disclose all your assets to them and then let them apply a standardized plan to get all your assets in their hands and invested in a way that maximizes profits without violating any duties to you as a client.

These plans are not necessarily bad for clients; but you should realize the intended result is their profits. For this reasons I strongly urge people to consider paying for the services of a financial planner that does not sell any product other than financial planning.

The Role of a Financial Advisor in Estate Planning

A financial advisor plays a pivotal role in managing your overall financial well-being. They possess expertise in various aspects of personal finance, including investments, retirement planning, tax strategies, and estate planning. While financial advisors can provide valuable advice on estate planning matters, it’s important to recognize that their role primarily revolves around the financial aspects of your estate.

Understanding the Scope of Expertise

Estate planning encompasses a broad range of considerations, including legal, tax, and personal factors. While financial advisors can offer guidance on the financial implications of estate planning decisions, they are not typically qualified to provide legal advice or draft legal documents. It is essential to consult an experienced estate planning attorney to ensure your legal interests are protected. 

If your financial assets are primarily in employer-sponsored retirement plans, such as 401k plans and pension plans, you may need to seek out an advisor with expertise with these plans and their rollover procedures

Collaborating with Professionals

To maximize the effectiveness of your estate plan, it is advisable to engage both a financial advisor and an estate planning attorney. By working together, these professionals can provide a comprehensive and holistic approach to address your specific needs and goals. The financial advisor can help analyze your assets, assess tax implications, and identify strategies to preserve and grow your wealth, while the estate planning attorney can offer legal expertise to draft essential documents like wills, trusts, and powers of attorney.

Assessing the Benefits

Relying on your financial advisor for estate planning can offer several advantages. These include:

  1. Financial Expertise: Financial advisors bring a wealth of knowledge and experience in managing wealth, investments, and tax considerations, allowing them to offer valuable insights when it comes to aligning your estate planning goals with your financial objectives.

  2. Coordinated Approach: By collaborating with an estate planning attorney, your financial advisor can help ensure that your financial and legal strategies work harmoniously. This coordination can lead to a more cohesive and effective estate plan.

  3. Ongoing Monitoring and Adjustments: A skilled financial advisor can continuously monitor your financial situation, track changes in tax laws, and recommend adjustments to your estate plan when necessary. This proactive approach can help you adapt to evolving circumstances and optimize your financial legacy.

Recognizing the Limitations

While financial advisors can provide significant support in estate planning, it is important to understand their limitations. Consider the following factors:

  1. Legal Expertise: Financial advisors are not qualified to provide legal advice or draft legal documents. Therefore, relying solely on a financial advisor for legal aspects of estate planning may leave critical gaps in your plan. Consulting an estate planning attorney is crucial to ensure your plan complies with applicable laws and regulations.

  2. Complex Cases: In cases involving intricate family dynamics, complex assets, or unique circumstances, a financial advisor’s expertise may be limited. An estate planning attorney, with their specialized legal knowledge, can navigate these complexities more effectively.

  3. Evolving Regulations: Estate planning is subject to evolving legal and tax regulations. While financial advisors strive to stay updated, estate planning attorneys are specifically trained to navigate these changes and can provide the most accurate and current advice.

Texas estate planning attorney

The problem I have with this business model is it seeps into areas of client’s life that need more guidance than a sales pitch. This is especially true with estate planning. Estate planning is not just about who gets to have your money when you pass away. It is about protecting your spouse and children and their financial security. It is about orderly dividing the family assets and heirlooms to the next generation. And it is about sharing peace with your family in a tough time. Financial services providers are not permitted to draft estate planning documents for clients nor are they typically trained or equipped to plan beyond offering products.

Certainly financial services providers have always been involved in this process. What is troubling is distilling estate planning to a quiz that says the best plan is giving them everything. That is what passes as estate planning for some large financial services providers. Much like dividing property in a divorce, using a form to decide your fate may result in unintended poor outcomes. 

Estate planning is both a legal and a financial issue. Estate planning has to be about the legal questions first. Discuss your planning needs with a lawyer that specializes in estate planning is a very important step. They can help you plan out the financial aspects and better explain how those products fit your needs. A Texas estate planning attorney can help with your estate planning or other legal needs.

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