Financial Planning Blindspots
In personal finance, unique circumstances often create blindspots where clients may not fully recognize potential risks or issues. As financial advisors, our role extends beyond managing investments. We are partners, guides, and sometimes coaches, helping clients make sound, informed decisions.
At Sowell, we encourage you to shine a light on these areas so your clients can move forward with clarity and confidence.
Insufficient Personal Liability Coverage
Most people carry standard personal liability coverage limits such as 100/300/100 or 250/500/250. But wealthier clients with net worth above $1 million may be dangerously underinsured.
A slip and fall, a dog bite, or a teenage driver’s accident could expose them to lawsuits far beyond those limits. While such events are rare, their financial impact can be devastating. Fortunately, additional coverage is often affordable, sometimes just $50 a month for millions in extra protection.
Encouraging clients to review this with their P&C agent helps them make an informed choice: keep the risk or transfer it to an insurance company.
Vehicle Ownership for Adult Children
For parents of 18+ drivers, ownership matters. If a parent owns the vehicle and the adult child causes an accident, the parent can be named in a lawsuit.
Consider recent headlines, such as the Murdaugh case, where family assets were at risk because of vehicle ownership. Encouraging clients to title cars in their adult child’s name may reduce exposure.
Inadequate Homeowners Insurance
Market value is not replacement cost. Rising construction costs mean that if a home is insured only for market value, clients may be underinsured in the event of a total loss.
Many clients shop insurance online for price alone, using market value as coverage. Raising awareness of this gap helps them avoid unpleasant surprises.
Powers of Attorney (POAs)
The blindspot isn’t the document itself—it’s how it works in practice. Too often, POAs are buried in a binder until they are urgently needed.
Does the attorney-in-fact have a copy? Does the custodian? Do they understand their duties? Addressing these questions in advance transforms a stressful situation into a smooth one.
Beneficiary Designations
Life changes such as marriages, grandchildren, and adoptions make annual beneficiary reviews essential. A critical question arises in blended family situations: if a parent and child die together, should the deceased child’s share pass to their children or siblings?
Explaining concepts such as “per stirpes” or discussing a Bloodline Trust can motivate clients to revisit their estate plans with an attorney.
Income and Expenses After First Death
It is uncomfortable but crucial to ask how income and expenses will change when only one spouse remains.
Real estate taxes, insurance, and utilities often stay the same. Food may shift, but not by half. Reviewing this scenario provides clarity and ensures surviving spouses are financially prepared.
The Takeaway
Your role as a financial advisor goes far beyond managing investments. By uncovering blindspots, you demonstrate care, foresight, and true partnership. Few others will ask these questions, and clients will remember that you did.
👉 Connect with Justin Travis, CFP® to learn more about how Sowell can help you identify and address financial blindspots for your clients.
👉Want to go deeper? Download our flyer on Outsourced Financial Planning to see how Sowell Management helps advisors deliver more value, more efficiently.
Disclosure
Advisory services are offered through Sowell Management, a registered investment adviser. Additional service fees may apply for certain planning or consulting services.
