Hey, Insurers: Offer Estate Planning at Scale

With Valentine's Day approaching, many of us will take the opportunity to remind our partners that we love them and care about them. Romance, not pragmatism, will be the underlying motif. If history is any guide, very few will give our partners the ultimate sensible and enduring gift: a will or estate plan that can help them financially if we shuffle off our mortal coil before they do.

Slightly less than half of all adult Americans (46%) have a will that describes how they would like their money and estate to be handled after their death, according to a 2021 Gallup Poll. That leaves about 145 million adult Americans without any plan for their estate when they die.

That same poll shows that the needle on estate planning has barely moved in the last 30 years.

Even the COVID-19 pandemic has not provided enough incentive to spur more legacy planning. In 2019, 40% of U.S. adults had a will; that percentage dropped to 32.9% in 2021.

We can infer from the data that we humans are highly vulnerable to procrastination when the topic is our mortality. We don't want to face the inevitable. And, even when we do, the legacy process of creating a will or estate plan is onerous, time-consuming, and costly. There are legal fees and visits, document creation and iteration, and all of it requires "rinse and repeat" — including more costs — every time a life event prompts a change to our legacy plans.

The Digital Makeover

Like so many other industries, estate planning has undergone a digital makeover. Multiple online, do-it-yourself estate planning products have come to market in the last few years.

By and large, these are entirely consumer-directed products. They don't offer platform integration elements that might allow for large institutions to integrate and offer estate planning capabilities to their captive customer bases under their brands. Most of these online products support legal document generation only; they are not designed to comprehensively accommodate ever-changing life events like marital status change, relocation, change in financial or health status, and so on.

Many of the products charge users for each legal document created or downloaded. These additional barriers fuel procrastination on what is arguably the most necessary set of actions all adults must take to ensure the financial well-being of their loved ones.

In any case, the Gallup data proves the products are not moving the needle much, if at all.

But what if estate planning offers were designed expressly to allow insurers, banks, financial advisory institutions, and employee benefits companies to easily extend digital DIY estate planning to their clients under their brands?

Where Institutions Come In

Presently, several financial institutions offer estate planning via referral to lawyers. Still, only a precious few have recognized the enormous opportunities a digital estate planning product could bring to their business. These opportunities include the ability to further cement client relationships with turnkey digital estate planning products that are comprehensive, cost-efficient, and accommodative of the changes wrought by significant life events to make it easy for clients to create and manage their legacy plans throughout their lifetimes.

As an add-on capability delivered across an institution's customer-facing platform, a digital DIY estate planning product could help the provider institution extend client relationships beyond the principal client to their families and heirs for generations. It would be inherently "sticky." It could also become another arrow in the quiver for institutions seeking to expand their reach among the mass affluent, typically defined as individuals with $100,000 to $1.5 million of investable financial assets and an annual household income greater than $75,000. This is a market of approximately 65 million in the U.S.

Financial advisory and insurance institutions, along with banks and employee benefits companies, are ideally suited to deliver estate planning options at scale and, in the process, help to remove the stigma and overcome the inertia that results in more than half of us not having a legacy plan in place. These companies are built to guide their clients' personal financial decision-making and actions. The trust is there.

Lessons From the 401(k) Plan

History shows us the power of institutional intervention to drive personal financial behavior change. The Social Security Act of 1934, corporate pensions, 401(k) plans, and even the "529" college savings program are programs and products delivered institutionally, at scale, that resulted in mass adoption and participation.

Normalizing estate planning will come when it's as readily available as a 401(k); the institutions guiding personal financial decisions are in the prime position to make it so. And when it does, we can expect to see the needle move significantly as more U.S. adults put a legacy plan in place.

Meanwhile, perhaps this Valentine's Day is a good time for all of us who haven't done so yet to supplement our romantic gestures toward our partners with the sensible step of putting our legacy plans in place for their benefit and the benefit of all our loved ones.

Sonny Kapoor is co-founder and CEO of OneDigitalTrust, an estate tech company that runs an estate planning platform designed for insurers, banks, financial advisory institutions and employee benefits companies that want to provide s branded digital estate planning product.