Choose Your Words Carefully

Reframing a planning conversation can alleviate client discomfort and pave the way for dialogue.

By Lucretia DiSanto Jones

Decades ago, Baby Boomers and their parents were notorious for their inability to communicate well with each other. The recent Allianz American Legacies Study illustrates that those old communication struggles are back.

Now, however, there are gaps between Boomers’ and seniors’ views of inheritance and legacy. The study reveals that seniors are seven times more likely than Boomers to believe they owe their children an inheritance. Also, nearly 40 percent of the elder generation says it is very important to pass financial assets or real estate to their children, but only 10 percent of Boomers feel this way.

Beyond the money
On the flip side, there is some common thinking between the two groups. According to the study, nonfinancial leave-behinds—like ethics, morality, faith and religion­—are 10 times more important to both Boomers and elders with children than the financial aspects of a legacy transfer.

“Many people wrongly assume the most important issue among families is money and wealth transfer. It’s not,” says Ken Dychtwald, president of Age Wave, the research firm that designed the study. “This survey found that for the overwhelming majority, legacy transfer had to do with deeper, more emotional issues. An inheritance focuses primarily on the money, but a true legacy also includes memories, lessons and values you teach to your children over a lifetime.”

Herein lies a very big obstacle for insurance and financial advisors whose clients include Baby Boomers and seniors. “Many families are not getting to the heart of the real issues,” says Mark Zesbaugh, CEO of Allianz Life Insurance Co. “If the conversation does not cover the four pillars people consider core to a true legacy—value and life lessons, instructions and wishes to be fulfilled, personal possessions of emotional value, and financial assets and real estate—the legacy conversation between the parent and the Boomer child doesn’t happen in a meaningful or effective way.”

Legacy vs. inheritance
To foster a more productive conversation, advisors will need to help clients reframe it. While it may sound simplistic, using the word legacy, instead of inheritance, could go a long way in making everyone more comfortable with the discussion.

“When we looked at the focus groups,” Zesbaugh explains, “what we really found was that ‘inheritance’ conjures up concepts of death, and it is not a very fun conversation. When we instead put in the word legacy, it kind of opened the doors up about how you want to be remembered. That’s how we then identified the four pillars of legacy in the study. When you talk about legacy, it doesn’t conjure up death; it conjures up life. In the focus groups, participants were much more apt to talk about how they wanted their legacy remembered rather than their inheritance.”

To be able to navigate the nonfinancial needs of clients, Zesbaugh says, advisors must be top-notch listeners. In fact, having superior listening skills is one of the attributes that those who participated in the study cited as important for a financial advisor to have. “The first and foremost is honesty and trustworthiness,” he says. “The second is easy to understand, the ability to make and keep things simple. And the third is being a good listener. Their actual financial capacity, understanding products and so forth, was much further down the list.”

Push the conversation
Do advisors who hold these attributes have an easy time of getting clients to the table for discussions of legacy planning? Not necessarily. Zesbaugh says that 68 percent and 71 percent of Boomers and their parents, respectively, said they are prepared to have a discussion about it; yet, less than one-third have actually had a conversation.

Why? Zesbaugh suggests that it goes back to the word choice issue. “It’s traditionally been put in the world of ‘inheritance,’ and talking about inheritance creates personal discomfort. Frankly, when we threw out the term legacy to the focus groups, they thanked us. It created the opportunity for them to bring the conversation up in a way that was more comfortable,” he says.

For more on the Allianz American Legacies Study, visit www.allianz.com.