Upon entering the London Underground for the first time, I had no idea what “Mind the Gap” meant until I saw it written on the station platform as I crossed the gap to the train. Being visual, I got “Look Right” immediately. It appears that many Americans are prone to the pedestrian’s equivalent of a “California Stop.” Coming to the curb, we naturally look left and only look right after we have begun stepping into the street. Do that too often in London and you will become a hood ornament on a lorry.
Enacademic, the investment dictionary, says financial travelers are also caught between two worlds –“Where you are [and] where you need to be…” And getting from one place to the other “…is not so clear cut, [because unlike the London Underground] there are no maps on the wall. So most people have no idea where they are.”
To solve this conundrum, James Parnitzke, in How to Build a Roadmap – Gap Analysis, writes that you must establish “a clear and unambiguous understanding of the current state, define the desired end state [and then use that information to] develop a well-thought-out road map to close the gaps uncovered in the analysis.” If you try closing the gaps without proper planning, author Charlie Gilkey warns that it could lead to “a lot of incoherent action, wrong turns, fits and starts, [and] confusion.” That’s why the traveler’s warning “to ‘mind the gap’ between the platform and the train is apropos for the investor undertaking estate planning as well,” says William Anderson in his post “Mind the Gap” and Avoid Costly Estate Surprises!” As an attorney, he complains: “While you can make every good effort to execute what you believe to be a sound estate plan, in many cases these fail to be completely executed [because execution is not just] about signing your will, trust documents, and/or powers of attorney.” It also involves properly titling your assets and synchronizing your beneficiary designations with your estate plan.
I first became aware of this execution gap as a young advisor when an attorney told me, “Stock brokers, insurance agents, and title company clerks do more estate planning by accident than all the attorneys in the country do on purpose.” Recently, another attorney referred to this situation as “appalling” and lamented the “tremendous dangers” of seemingly innocuous actions. Being aware of this problem, we have always focused on the gaps in the execution of our clients’ estate plans, as well as in the implementation of their overall financial plans. Way too often, clients and their advisers do things that seemed like a good idea at the time without stepping back and looking at the situation from all directions. That can be as dangerous as stepping onto a London street after only looking left. Ill-conceived actions can lead to unintended costs, taxes, and other consequences. Advisors, brokers, and insurance agents should be required to take a Hippocratic Oath pledging to “first do no harm.”
In your financial travels, “If you don’t know where you’re going, any road will take you there,” cautions George Harrison in a Lewis Carroll paraphrase. However, as long as you’re not eligible to be on the last page of The Economist we can help you get and stay on the road that leads to where you need to be. And we do that by proper planning and prudent execution that is careful to mind the gaps.