Estate Planning Is 'The Next Frontier' for Advisors: Steve Lockshin

Q&A February 23, 2024 at 02:02 PM
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"Estate planning is moving to the forefront of the consumer's mind," says Steve Lockshin, the founder of the estate planning platform Vanilla.

His goal is to move it to the forefront of the financial advisor's mind.

In a recent interview with ThinkAdvisor, the AdvicePeriod co-founder and principal argues that estate planning is "the next frontier. This is true for anybody who has any wealth at all."

Lockshin, an early champion of high tech for advisors, discusses why he thinks estate planning will become "a staple" with financial advisors and why it is "an important family security issue."

Vanilla's software automates the process, making it easier for financial advisors to customize strategies at scale.

It can be used for clients at all asset levels, Lockshin says in the interview, and the firm's client base includes both small RIAs and large financial institutions, like Vanguard.

Here are excerpts from our conversation:

THINKADVISOR: What should advisors be doing now about estate planning for clients?

STEVE LOCKSHIN: Paying attention: At the end of 2025, the current tax exemptions are due to sunset — basically get cut in half. So use it or lose it. 

Secondly, the massive wealth transfer from baby boomers to the next generation has started. Statistics aren't good for advisors that don't interact with the children of their clients.

Because by the time the second parent dies, they usually leave the [parents'] advisor and go to their own.

Why will "estate planning … become a staple with financial advisors," as you said?

The next frontier is estate planning. This is true for anybody with any wealth at all.

What makes it "the next frontier"?

Advisors are using it as a differentiator. Advisors that were losing business to those who were handling estate planning became wise and began to focus on it. 

Estate planning is moving to the forefront of the consumer's mind. With the pandemic, people were dying or thought they might; so putting their affairs in order became even more important.

And now there's more and more articles and TV advertising about estate planning services.

But Vanilla, holistic in scope, is more than creating wills, trusts and other documents, isn't it?

That's a feature, but the core product is the facilitation of everything around estate planning. [This embraces] the client, financial advisor, CPA, lawyer and the client's family.

Ultimately, it will be a place where, we hope, anyone related to a client's financial condition will share information. 

We originally designed the product in Excel for our own clients. I wanted to automate it and put it online. As we got further, we decided there was a business there to share with advisors.

What's Vanilla's main objective?

To make advisors look great serving clients' needs with respect to estate planning. 

Dying intestate can be very problematic to someone's financial well-being. Estate planning is an important family security issue.

People need to be well prepared in the event of an untimely death. 

What else should be considered?

The other part of estate planning is tax minimization. The legal profession is extremely manual and doesn't really leverage technology.

We're making accessible to lawyers the pieces they typically don't have: updating a client's balance sheet continuously, having their documents all in one place and updated, staying on top of changing laws, helping them digest the documents and coming up with solutions.

Please describe your client base.

It's the entire spectrum, ranging from solo practitioners of law firms to small RIAs to large financial institutions, such as Vanguard.

In a previous interview, you said that advisors argue that computers can't do estate planning. You called that "nonsense" because "it's rules-based decision-making." So now Vanilla is doing it. Right?

Yes. One of the things done manually that will soon be fully automated is reviewing documents.

Vanilla pulls out all the important information and organizes it. What used to take an hour has been cut down to 10 minutes. When fully operational, it will take an instant, I'd say.

Five years ago, you told me that automated advice would bring "a major depletion of human advisors" and "avoid conflicts of interest." Still think so?

Yes. Technology will separate the wheat from the chaff. For about five years now, in some cases, it's become almost indistinguishable to talk to a computer [vs. a human].

And now with AI, computers can say "umm" and "mmm" [as if thinking and listening]. They can detect tone and emotion.

The only difference is that humans put the information into the computer, it spits out the answer and a human interprets it for the client.

Prominent people, including F. William McNabb, former Vanguard CEO; NBA legend Michael Jordan; and Jason Wenk, founder and CEO of Altruist, are investors in Vanilla. What prompted them to get involved?

Michael Jordan has been a client for a very, very long time. [He was] interested in backing what we were doing because [he] has benefited from all the estate planning I've done for him.

I met Bill McNabb when he was doing due diligence on another company, and we started to talk about it. I was already in the process of working with Vanguard.

Jason Wenk's board and our board are almost identical. And Bill is on both boards.

So there's a lot of overlap among the companies.

Why did you name the firm Vanilla?

The day we [opened], I used the term "vanilla" [while] talking to the crew: "It's all vanilla planning. We don't do anything that's incredibly unique. It's just understanding how it all fits together," I said.

When I came back from lunch, they told me, "We have a name for the company: Vanilla."

I was like, "I love it."

Are you still the head of AdvicePeriod, which you co-founded and is now a part of Mariner Wealth Advisors?

Yes. I'm a "concierge doctor" when it comes to financial advisory.

I deal with very wealthy people with very special circumstances, and we charge them a fixed fee.

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