We’ve found that once the qualitative aspects of a financial plan and a legacy plan are firmly rooted, all of the quantitative elements come much more easily
At Pioneer, we meet every day with people who have achieved great things, both professionally and financially. They have built amazing lives for themselves and for their families. But, of course, no two families are exactly alike.
We’ve come to realize that the choices people make with their money reflect their unique values, vision and philosophy—and are often expressions of what those people truly love.
When it comes to estate planning and creating a legacy, expressing what we truly value can often be daunting and complex. Many of our clients point out that they have a good attorney, CPA and investment professional, but they have no one on their team who talks to them about bigger-picture issues that can’t be put into a template or onto a spreadsheet. They have no one who can help them really get to the heart of their own philosophical view of money: how it’s made, how it’s given, to whom it should go and why.
We feel that this “why” is the big missing piece in intergenerational wealth planning today. While so many professionals are focused on the quantitative—maximizing tax efficiency, purchasing X dollars of life insurance or beating benchmark rates of return—the industry is not spending enough time talking about whom clients want to give their money to and why.
For this reason, when discussing legacy planning, we make sure to slow down and focus on the “why.” We start by asking what it is that our clients truly value. We walk them through a values exercise that helps clarify what they really care about, such as family, community and integrity, just to name a few examples.
We also help them to gain a deeper understanding of their personal vision, a glimpse into a future that they find inspiring and engaging. When clients fully embrace what they’d like to create during their lifetime, they can be more intuitive about articulating what they’d like to provide for others when they are no longer here.
We’ve found that once the qualitative aspects of a financial plan and a legacy plan are firmly rooted, all the quantitative elements come much more easily.
To help clients further clarify how they’d like to make decisions about their money, both while living and after they pass, we’ve developed a process based on Abraham Maslow’s now-famous hierarchy of needs. Our version, called the Family Hierarchy of Needs, addresses the basics of what many people want to provide for themselves, their children, their parents and, at times, their extended family. This starts with providing care and empowerment.
Providing care means making sure everyone has their baseline material needs met: a place to live, food to eat, and the assurance of healthcare, both physical and psychological.
Empowerment means not subsidizing individuals or stifling ambition with unlimited financial support, but instead providing assistance where necessary to allow them to pursue a calling, profession or business opportunity that they are truly passionate about. Education, of course, is the cornerstone of empowerment, with financial independence being the ultimate destination.
Legacy planning is unique in that it forces us to confront our own mortality, something that is not easy for anyone to do. Yet we believe strongly that spending the time to get to the heart of what our clients truly value is the only way to build a meaningful legacy plan—one that will continue to affect the people and causes that they care about for generations to come.
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Kevin R. Luchetta offers advisory services as a representative of Northwestern Mutual Wealth Management Company (WMC), a limited purpose federal savings bank, and a subsidiary of The Northwestern Mutual Life Insurance Company, Milwaukee, Wis. (NM). Northwestern Mutual is the marketing name for NM and its subsidiaries. Kevin R. Luchetta is an insurance agent of NM (life and disability insurance, annuities and life insurance with long-term care benefits) and a registered representative of Northwestern Mutual Investment Services, LLC (NMIS) (securities), an NM subsidiary, broker-dealer, investment advisor, member FINRA, SIPC. Pioneer Financial is a marketing name used by a group of Northwestern Mutual representatives (not all of whom are affiliated with WMC), including Kevin R. Luchetta (referred to as the “firm”), and is not a legal entity, partnership, investment advisor, broker-dealer or affiliate of NM. The views expressed herein are those of the author and may not necessarily reflect the views of Northwestern Mutual.