Why You Should Not Have an Investment Broker or Insurance Agent do Your Estate Plan

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Perhaps you have got a local insurance broker or investment advisor who has long been your most trusted source of investment and retirement planning advice. This person has helped you build successful investment products, told you just when to buy and sell stocks, and maybe even led you to substantial wealth throughout your working years. Now, as you approach retirement and your golden years, you are considering how you want to establish your final estate plan to best preserve your assets for your heirs and leave a sizeable legacy for those you love.


Do you go back to your insurance agent or investment advisor? Do you hire a lawyer?  Ultimately, it is entirely your decision. Before you make your choice, here are a couple strong reasons to consider hiring an experienced estate planning attorney instead of a commissioned sales person.


What Duties Does Your Insurance Agent or Broker Owe You?


As the old adage goes, ‘follow the money.’ If you want to know who is really looking out for your best interests, just ask yourself how your trusted advisor gets paid. Insurance agents and investment brokers are generally paid a commission, meaning the more they sell you, the more money they make. Therefore, a lot of insurance agents are keen to lobby for you to purchase annuities and whole life insurance products. Perhaps a reverse mortgage or bond product would be a good fit. Ultimately, many of these so-called ‘investment products’ are nothing more than poor investments that mostly benefit the salesperson who is pushing them.


Should Your Agent or Broker Even be Handling Estate Plans at All?


The Alabama State Bar Association takes a strict view of the unauthorized practice of law. While many investment advisors may be wonderful individuals with good intentions, they should not be advising clients on complex legal rights, such as trusts, estate planning, and the drafting of wills. Many investment advisors will claim that they have the documents reviewed by an attorney, who in turn advises you, the client. These types of loophole options do not serve the consumer well. After all, where do that lawyer’s loyalties truly rest? With you or the advisor?


Advisors are Not Necessarily Fiduciaries


There is still talk of a full repeal of the fiduciary rule, a Department of Labor (DOL) rule that would require financial planners, investment brokers, and other industry “advisors” to act in a fiduciary capacity.


A fiduciary is someone who is legally bound to act in their client’s best interests. Attorneys are bound by law to act in their clients’ best interests. This is one of the touchstones of the attorney-client relationship, and it is one of the key reasons why the legal profession self-regulates itself by harshly punishing those attorneys who violate this rule.


However, historically financial advisors had no such requirement. To date, there are continuing appeals and delays to the start of the rule. In fact, many suspect that the rule will never fully be enforced or implemented. Currently, brokers can sell products that make them a profit, even if totally adverse to their clients’ interests. Under the so-called fiduciary rule, advisors would be required to provide more transparency and notify their clients when they have a conflicting financial interest in selling products.


Since 2016, the rule has seen court battles and a litany of political discourse. Financial Times did a great job of explaining how the rule has certain pros and cons for consumers, but for now, the fact remains that many advisors are not required to act in their clients’ best interests.


Get Ethical and Personalized Estate Planning Advice Today


Throughout the Birmingham area, the lawyers of Five Points Law Group are available to consult with clients to help families get the competent, compassionate, and accurate estate planning advice they need in order to preserve their legacies for generations to come. Call to schedule an appointment today.

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