Conversations about product can actually open up wider estate planning topics, says RBC Insurance exec
Selene Soo knows firsthand what happens when someone passes away without a will or an estate plan. The director of product management at RBC Insurance lost a member of her family a few years ago and that family member didn’t have a will. In the midst of an emotionally difficult time for the family, they had to grapple with issues of probate, inheritance law, and questions of what that family member might have wanted. She now sees the vast majority of Canadians at risk of a similar outcome.
A recent RBC Insurance survey found that among Canadians over aged sixty five, only twenty four per cent have an estate plan. That number falls all the way to 15 per cent when the survey is widened out to the total adult population. Soo explained some of why there is such a gap in Canadian estate planning as well as how financial advisors can help close it. She outlined that despite some of the difficult topics encompassed within the estate planning process, a conversation about product can actually help to open up a conversation about estate plans.
“As Canadians are continuing to age that discussion around estate planning is going to happen a lot more with their financial and their insurance advisors,” Soo says. “From an advisor’s perspective, a big part of estate planning is to make sure that you're helping your client structure their insurance and their investments and finances in such a way that will minimize taxes and fees and maximize what their clients loved ones receive when they pass away. So, products such as life insurance and segregated funds as part of the estate plan because they bypass probate.”
Opening with the utility of these insurance products can help introduce the difficulty inherent in the probate process and the risks that clients may face if they lack an estate plan. Many people will prefer to avoid the topics of death and taxes encompassed within the estate planning process. In explaining why estate plan coverage is so low among Canadians, Soo explains that some will think they are too young, or that the process is too time consuming, expensive, or complicated. She argues, however, that estate plans are a necessity for all Canadians and that they don’t need to be complex to be effective.
Insurance conversations can be one of the ways that advisors begin that process. Soo notes that by introducing the need for life insurance, advisors can begin to talk about who would receive any assets after death and how that process can be made smoother than going through probate. Segregated funds, too, can help in preparing a client’s family for the intergenerational wealth transfer.
Asked when advisors should introduce the idea of estate plans to clients, Soo simply says “now.” She argues that no matter where a client is in their age or life, having the base of an estate plan can help them. She reiterates the fact that a plan can be simple and straightforward, especially as a baseline for a younger client.
While estate planning may not be in financial advisors’ traditional wheelhouse, there are a growing number of tools designed to support advisors in building simple estate plans. Those can include AI estate planning tools as well as traditional support resources offered by firms like RBC insurance.
While estate planning is not necessarily easy work, involving potentially difficult conversations with clients, Soo believes that by engaging in estate planning advisors can create deeper relationships with clients and set up their businesses for the great intergenerational wealth transfer.
“As baby boomers leave inheritances to the younger generations I think its important for advisors to help their clients with estate plans, as they do so they will get to know their families and get to know their beneficiaries,” Soo says. “This can help them understand where their clients’ assets will go and that can help them grow their own businesses…It might be daunting at first, but some upfront planning now can ensure that clients’ families and loved ones know what their final wishes are. It minimizes family conflict, allows them to minimize taxes, and avoids assets getting tied up in the court through probate.”
