Checking beneficiary designations at client reviews: a small RIA routine
A small RIA can add a short beneficiary check to every client review and after every life event such as a marriage, divorce, birth or death: confirm with the client that the beneficiaries on each account still match their wishes, note the date of the check on the client's record, and help the client update the custodian's form if anything has changed. The custodian's designation is what counts, so changes go through the custodian's process.
A client divorced six years ago. At their death, their retirement account goes to the former spouse, because that's who was named on the custodian's form, and nobody had looked at it since. It's one of the most common and most avoidable problems in client service, and the fix is a two-minute question at each review.
When should beneficiaries be checked?
| Trigger | Why |
|---|---|
| Every annual review | Wishes change quietly |
| Marriage or divorce | The most common source of out-of-date forms |
| A birth or adoption | New family members are often left off |
| A death in the family | A named beneficiary may have died |
| A new account opened | Beneficiaries are often left blank at opening |
What's the routine at a review?
- Before the meeting, pull the current designations from the custodian for each account.
- In the meeting, ask: "Do these still match what you want?"
- If not, help the client complete the custodian's change form.
- Note on the client's record that the check was done, the date, and any changes requested.
- When the custodian confirms the change, keep the confirmation.
A worked example
Take a hypothetical two-person RIA that adds a beneficiary check to its review agenda. At one review, a client who remarried two years earlier sees their former spouse still named on an IRA. The change form is completed that day, the custodian confirms it a week later, and the confirmation and a dated note go on the household. Across a year of reviews the firm finds four forms that needed updating.
What are the common gaps?
- Beneficiaries left blank when an account was opened.
- No check after a divorce or remarriage.
- Assuming the will covers it.
- No record that the check happened.
When is this overkill?
It isn't. It takes two minutes per review and prevents some of the most painful problems a family can face.
How Advorra fits
Advorra keeps households, their members and accounts, communications and tasks on one record, so a dated note of each beneficiary check and any follow-up task sit with the client. The custodian's designation remains the official record. See the product page, or read about the annual client review and when heirs become clients.
One thing to do this week: add "beneficiaries still right?" to your review agenda.
An operations routine, not legal, tax or estate advice.
Questions advisors ask
Why do beneficiary designations matter so much?
For many retirement accounts, the beneficiary on file with the custodian decides who inherits that account, often regardless of what a will says. An out-of-date form can send money to the wrong person.
How often should they be checked?
At every annual review, and after life events: marriage, divorce, a birth, a death in the family.
Who updates them?
The client, on the custodian's form. The firm can prompt and help with the paperwork.
Should we record the beneficiaries ourselves?
Many firms note that the check was done and when, and keep a copy of the custodian's confirmation. The custodian's record remains the official one.
Is this legal or estate advice?
No. Estate questions belong with the client's attorney.
See it on a demo firm
Advorra is practice software for independent RIAs: clients, models, IPS, billing and compliance records in one place, on top of the custodian you already use. Built by The CollabHub.
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