What-if Planning - A Much Ignored Topic!

Often in the day-to-day rush, of earning a living and investing whatever one saves, a very important aspect gets missed out on - the unpredictability of our very existence.

Hence, the question of what if something were to happen to me now, how do my loved ones get access to my investments, whom do they get in touch with, how do they even start, gets very little consideration. Either we do not wish to discuss this subject, or we do not give it due importance.

Ideally, our wealth managers should be the ones who should ensure this aspect gets prioritized and dealt with, in the right earnest. But from what I have seen, it does not get much attention.

I remember coming across a crazy instance a few years back, where the depository account of an ultra-HNI who had several hundreds of crores in stocks and bonds, was held in a single name without any nominee. The broker or wealth manager this person was dealing with was managing the account for the longest time, but none bothered. It was a big red flag, as God forbid, had something happened to the owner, the institution would have frozen the account, and the family would have had to run from pillar to post. A simple check would have ensured that either a second holder and or a nominee got added.

Ironically, the very institution which made huge profits from this person during his lifetime, would have perforce turned their backs, post him.

Only in recent times, and that also due to a push from the regulator, this topic has got some attention. However, here too, the focus of the wealth management industry continues to be on products, wills and trusts, where there is money to be made. And the reason for that is the industry continues to be dominated by the commission-based approach, where the wealth manager earns only if there is an underlying product bought by the client.

On the other hand, this topic is one of the key focus areas for fee-based wealth managers. As their focus is on covering every single aspect of their client's lives and their fee gets determined accordingly. Be it financial planning, investment planning, insurance planning, liability planning, and succession planning, what we at Serenity Wealth refer to as what-if planning. Each of these subjects need deep conversations between the client and the wealth manager. It also necessitates subject matter understanding and well-defined templates and frameworks, at the wealth manager's end.

Hence, before one gets to instruments like wills and trusts, simple yet powerful concepts like having an Asset Register and ensuring the holding pattern is done well, get adequate focus.

The fee-based advisors see their role more as risk-managers, who need to keep asking what can go wrong and how to plan for those scenarios. What is within control is how to protect our clients so that their hard-earned money does not get stuck, in case of any unforeseen eventuality.