It’s an important question, but one few investors or retirees consider.
A 2014 study found that 87 percent of Britons lacked a plan to sort out their “digital legacy,” – their collection of digital movies, music, books, social media accounts, digital currency such as bitcoins, and other cloud-based materials – after they die. For Americans, the numbers are likely comparable. Failing to include your digital footprint into your estate plan is a costly – in some cases, very costly – mistake that can cause family members considerable grief, said Leon C. LaBrecque (JD, CPA, CFP, CFA), the CEO of LJPR Financial Advisors.
“I counted and I have 32 PINs,” LaBrecque said, referring to his personal digital footprint. “Digital legacy is exceedingly important.”
LJPR Financial Advisors, based in Troy, Michigan, provides one stop shop financial planning, retirement, taxation, and estate planning services to individual and institutional clients, with a specialty in police and fire retirees. The firm’s clients are “Intelligent, but not expert investors, and they’re the kind of people who value expert advice,” LaBrecque said, adding that the firm works primarily with investors holding at least $500,000 in investable assets.
The need for digital legacy protection prompted LJPR Financial Advisors a few years ago to revamp its client forms to include PINs, account names, and other information that would allow clients’ online personas to be traced. The information then allows advisors to work these digital keys into a client’s estate plan.
The data shows why that is necessary. According to recent studies, 85 percent of American adults, and 95 percent of teenagers, use the Internet. Of those people, 80 percent use social media such as LinkedIn, Facebook, or Twitter (social media accounts for 25 percent of all time spend online). Further, more than 50 percent of seniors are on-line, and, shockingly, 92 percent of children younger than two-years-old have a digital presence. Those numbers make it clear that safeguarding clients’ digital legacies applies to more than just software engineers, web designers, and bitcoin traders – it applies to grandparents, construction workers, and police officers as well.
The law regarding digital properties can be complex as well. Unfounded rumors in 2012 led to media reports that Bruce Willis was preparing for a legal battle with Apple over his collection of iTunes downloads, which many claimed he wanted to pass on to his daughter. Though false, the rumors raised important questions about how digital legacies work and who inherits bits of data sitting in servers thousands of miles away.
LeBrecque told The Suit Magazine that user-agreements (“Those things you don’t read,” he said, pointing out how most people quickly click through the agreement when it pops up during service installation) often contain surprising stipulations for assets tied to PINs and digital platforms.
“Sometimes if you read them, you’ll find out it says that if you die or become disabled, the assets of this PIN become [the institution’s], unless you assign it correctly,” LaBrecque said.
LaBrecque began his finance career 40 years ago, taking his first job as a CPA in 1977. Before that, he’d grown up as a “street kid” in Hazel Park, Michigan. LaBrecque’s worked as a CPA for most of the 1980s, but later transitioned into financial literacy work.
“My dad was an autoworker and I saw that he needed help more than anybody did, so I got into literacy,” LaBrecque said.
LaBrecque’s interest in financial literacy inspired him to pursue a career in wealth management. The literacy issues that drew LaBrecque to the industry are even more important now than when he began in the 1980’s, he shared.
“What’s happened in today’s world is that self-reliance has become much more important,” LaBrecque said. “Millennials … are not going out and getting jobs at the same place for 30 years and getting a pension. It becomes essential that young people not only learn about debt, but that they learn how to save, and how much to save.”
LJPR Financial Advisors has taken on financial literacy with gamification initiatives – essentially, turning complex financial concepts into educational games. LaBrecque brought some of those initiatives into local high schools because he believes in educating consumers as early as possible. He even taught his own kids financial literacy by having them fill out dividend cards from an early age and letting them reap the rewards (his daughter invested in Mattel because she liked Barbie, he said).
LaBrecque’s literacy push dovetails into his investment philosophy: consumers should be educated and aware of exactly what fees they are paying, and what they get in return for their money. LJPR Financial Advisors is a fiduciary firm – meaning they put clients’ interests before the firm’s – and that means educating clients often comes first.
“Absolutely I’m a fiduciary,” LaBrecque said. “I’ll tell you to pay off your mortgage, I’ll tell you to put money in the bank, I’ll tell you to do whatever’s best for you, that’s what my job is.”
A recent poll showed six in 10 wealth advisors are opposed to the Department of Labor’s (DOL) new rules requiring more financial professionals to act as fiduciaries. LaBrecque, however, stands in the minority, supports the new rules, and said that his business has always practiced fiduciary standards on its own.
“It’s my CPA, attorney mentality that I always do what’s best for my clients,” he said. “We’ve always acted in [the clients’] best interest … To us, the rule makes perfect sense.”
The Trump administration in February issued an executive order asking the DOL to revisit the fiduciary ruling, but no changes have been made yet. As of March 2, DOL extended the rule for 60 days. The Securities and Exchange Commission, which regulates the financial industry, declined over the past several years to implement a fiduciary standard. The DOL entered the fray in 2015 and issued its own ruling, something many observers felt was the Obama administration attempting to do an end-run around Wall Street and the financial industry. Whether the rules stay intact or not, the controversy stirred by the ruling forced consumers to understand what a fiduciary is, which is a good thing, LaBrecque said.
“My solution to consumer protection is smarter consumers,” he said.
Digital legacies, financial literacy, and investor education come together at LJPR Financial Advisors to produce tailored wealth management and estate plans that help clients grow their money, reach goals, and enjoy retirement. Communication is key at LJPR and the firm recently implemented a “dashboard” feature for tech-aware clients to see their account whenever they want. The company also factors in extreme longevity (into the 90s or even 100s) into plans and considers the possibility of long-term care expenses.
But more importantly, LaBrecque said, is to get started early and plan well. Unexpected events can strike at any time. The key to reducing uncertainty is developing a strong plan.
“Clients think if they do an estate plan that they’re going to die, there’s no relationship as far as I can see on that,” he said. “The main idea is do not procrastinate.”
For more information on LJPR Financial Advisors see www.ljpr.com
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