I was reading a note from Carl Richards today, [his cartoons are really great, aren’t they?*] He made the following comments:
As soon as somebody depends on you financially, you need life insurance.
Most of us know this, but for some pretty good reasons, we don’t really want to think about it. To start, someone has to die for life insurance to be of use. Also, buying a policy means putting a price on the life of someone we love. That’s all complicated, messy, emotional stuff.
So we’re stuck lying in bed thinking about this dilemma: We know we need the insurance, but it’s the last thing we want to think about. So let me get to the point here and just give one very simple way to check life insurance off your mental checklist.
My goal is to give you a “good enough” plan that you’ll actually take action on, rather than spending time in the pursuit of the “perfect” plan you will never find. We want you to sleep at night, and this good enough plan will do that.
A continuity and succession plan is a life insurance plan for financial advisory firm owners. Over the last year or so, succession planning for financial advisors has been in the trade press regularly – first as a recommended best practice and most recently as a regulatory requirement. In fact, Pinnacle hosted a webinar this week on this very topic. We were intrigued to discover in the results of the registration survey that despite the fact that states will soon be adopting a rule requiring business continuity plans that address key person risk, only half of our registrants currently have a business continuity plan in place and a whopping 65% of those plans still do not address the loss of key personnel! Its time to check a business continuity and succession plan off your mental checklist.
For those Advisors who can’t seem to get around to completing a “get hit by the bus” agreement, let me suggest something – As soon as the life dreams of a client depend on you, their financial advisor, you need a continuity plan.
Of course we are biased. We think you probably need a PRISM agreement with Pinnacle. PRISM is our continuity plan that will protect your family and clients in the event of your death or disability. Should something happen to you, your clients will be cared for by one of the leading wealth management firms in the nation. Like Richards notes, a good enough plan will do. We are not a perfect fit with everyone however, PRISM is 100% revocable giving advisors peace of mind knowing they have a plan in place with the flexibility to change course if something perfect comes along. Don’t you think it’s time you: a) took a serious look at the PRISM arrangement, and b) set a deadline for when you will have an agreement in place with someone?
*Carl Richards CFP, author of “The Behavior Gap: Simple ways to Stop Doing Dumb Things with Money”