For financial advisors, dealing with issues concerning clients’ children, from education costs to legacy goals, is a common part of the planning process. But a growing number of individuals are going through life without ever having children. And no matter the reason, clients without children have unique planning needs that are important for advisors to recognize.
First, advisors can determine whether a client is “childless” (does not currently have children but might in the future) or “Childfree” (does not currently have children and does not ever plan on having children). And if a prospect or client does identify as Childfree, advisors can respect their lifestyle by refraining from asking whether they are certain about the decision or prying into their reasoning behind the decision (because questioning along these lines can often be misinterpreted as judgment calls, and the Childfree client likely already has to field these intimate questions from friends and family on a regular basis!).
For advisors with Childfree clients, it is important to recognize that these clients often have different lifestyle arrangements than clients with children. For example, they may be in a long-term relationship without being legally married, or they may live in more-than-2-person groups for both personal and financial reasons. In addition, Childfree clients often have more flexibility and mobility when it comes to relocating or taking extended time away from work throughout their careers (which increases the opportunity to do the detailed cash flow planning to make that happen!). Yet being Childfree can also come with additional burdens, such as being expected to take care of aging parents or other dependent family members (because they are often expected to have ‘extra’ time by not having to care for their own children).
Because of their particular situation, Childfree clients often have unique planning needs, particularly when it comes to insurance. For instance, Childfree clients, especially those who are single, may have less need for life insurance than couples with dependent children. On the other hand, Childfree clients often have an increased need for disability coverage, as they might not have a support system to carry them through their retirement. Similarly, Childfree clients often prioritize long-term care insurance as a way to ensure they are not a burden on others in old age.
Childfree clients can also face unique estate planning challenges. For example, it is more common for Childfree people to want to spend or gift their money during their lives (as they do not have children or grandchildren to leave money to upon their death). Which means that advisors with Childfree clients who opt for a ‘Die With Zero’ approach must balance their spending and gifting by maintaining a sufficient financial cushion to cover their lifetime spending needs. Also, because they might not have any immediate relatives, Childfree clients might explore the option of using a professional trustee and fiduciary as their executor, POA, and medical proxy.
Ultimately, the key point is that Childfree individuals have unique goals and challenges to address in the planning process. And those advisors who are able to address the specific needs of Childfree clients have a potentially profitable opportunity to serve a growing niche market!