Why are Kiwis reluctant to Estate Plan?
As a financial adviser, you know how difficult – and yet crucial – it is for people to think about the unexpected. No one likes to talk about what would happen to their loved ones after they're gone or if they can no longer make decisions for themselves or if their personal or business relationship break ups.
Just like personal insurance conversations, Estate Planning covers many sensitive areas. So, how can you introduce your clients to it?
The key thing is to let your clients know that taking care of their Estate Plan now can make all the difference to ensuring their family’s future is secure if and when life’s tough events take place.
The benefits are many and varied, but first, we need to overcome the emotional barriers that keep Kiwis from planning in advance.
Some believe it’s too early
In 2018, the Commission for Financial Capability found that only 47 per cent of New Zealanders have a Will, and one of the reasons is because they think they’re too young to consider it. However, the uncomfortable reality is that death (or serious incapacity) can occur at any age. Also, the sooner they put their Estate Planning documentation in order, the easier it will be to update the documents as their personal and financial circumstances change over time.
Some keep procrastinating or avoiding it
According to Perpetual Guardian, Kiwis don’t want to think about what would happen if they died or became incapacitated. However, the longer they leave it the more complex their relationships and assets become, and leaving it too far into the future can limit their options. Early Estate Planning can provide them with a wider range of options while also providing peace of mind while they get on with living life well.
Some think it’s too expensive
Perpetual Guardian says this is one of the many reasons why most New Zealanders don’t reach out for financial advice in the first place. What they may not know is that there are plenty of solutions to meet different needs and affordability levels. If affordability is a concern, make sure your client is aware of their options. A key point is that not sorting out will usually be more expensive, as it can result in costly legal and court expenses.
Some think they don’t have enough assets to justify it
It’s a common misconception that Estate Planning is just for the wealthy. In fact, probate is required for assets over $15,000 in value and KiwiSaver alone can quickly add up to this amount.
Although half of New Zealanders don’t have a Will (which is only one facet of Estate Planning), that doesn’t mean they’re not thinking about getting one. Emotional barriers, misconceptions and stereotypes may be keeping them from taking that all-important step.
On the other hand, recent surveys conducted by the Commission for Financial Capability and the Financial Services Council found that financial worries have an impact on Kiwis’ overall wellbeing. By having a good conversation about Estate Planning with your clients, and motivating them to take action, you can contribute to your clients’ peace of mind. It can also empower them to make better decisions about their current and future assets, with an awareness of the impacts on their personal and business relationships.