As a financial advisor, you dedicate yourself to fostering your clients' financial health and stability. A central part of this commitment involves comprehensive financial planning, which extends beyond mere asset management and financial guidance. The necessity for thorough estate planning, including establishing a power of attorney, is fundamental to this process. In this article, we will delve into why your clients need powers of attorney and how such documents can strengthen your role as a financial advisor.

Overview

A power of attorney (POA) is a legally binding document that allows an individual (the principal) to grant another person (the agent or attorney-in-fact) the authority to act on their behalf in private, business, or other legal matters. The scope of the POA can be as broad or as limited as the principal chooses. It is an instrument of trust and an invaluable safeguard against unpredicted incapacity, wherein a trusted person is vested with the authority to manage the principal's financial affairs.

Reasons to Have a POA

There are a number of reasons why your clients should consider having a POA. Here are a few:

Protecting Clients' Financial Interests

The primary reason for promoting a POA to your clients is to ensure the protection of their financial interests in the event they become incapacitated. Accidents, illnesses, or the natural process of aging can unexpectedly leave individuals unable to manage their finances effectively. If such an unfortunate event happens without a POA in place, the client's loved ones may need to go through a long, costly, and emotionally taxing court process to appoint a conservator or guardian.

Avoiding Family Conflicts

Another compelling reason for the need for a POA relates to family dynamics. In the absence of a POA, the law may assign decision-making rights to a close relative, potentially igniting family disputes about who should be in charge or what course of action should be taken. By appointing a trusted individual through a POA, clients can control who will make important decisions on their behalf, reducing potential family conflicts.

Flexibility

The flexibility of a POA is an additional selling point. Clients can choose between a durable or non-durable POA, based on their specific needs and circumstances. A durable POA remains in effect even after the principal becomes incapacitated, whereas a non-durable POA becomes ineffective upon the principal's incapacity. The client can also decide whether the POA becomes effective immediately or springs into effect under certain conditions, like incapacity. All GoGo Estate powers of attorney are considered "durable powers of attorney."

Moreover, a POA can be as broad or as narrowly defined as the client wishes. This means your clients can authorize their chosen agent to manage all financial matters or only specific tasks, such as paying bills, managing real estate assets, or handling investment decisions.

Your Role as an Advisor

As a financial advisor, understanding and discussing the importance of a POA with clients presents an opportunity to provide a holistic, proactive service. It emphasizes your role as a trusted advisor who doesn't only focus on wealth accumulation and management but also on wealth protection.

By discussing POA, you demonstrate that you care about your clients' overall well-being, not just their financial success. This, in turn, can strengthen your relationship with your clients, as they will see you as a comprehensive advisor who considers all aspects of their financial life.

Furthermore, in the event of a client's incapacity, having a designated agent can streamline the process of financial decision-making. As a financial advisor, you can continue to provide your services without any legal obstacles, working directly with the agent under the terms of the POA.

Conclusion

The power of attorney is a powerful tool that complements financial planning and safeguards clients' interests in unforeseen circumstances. By advocating for the importance of a POA, you can contribute to the comprehensive well-being of their clients, cementing your role as trusted and holistic financial guardians.

In essence, promoting the concept of a power of attorney is not just about protecting your clients; it's also about advancing your role as a comprehensive financial advisor. When you help your clients plan for every eventuality, you prove your worth beyond the numbers.