An intergenerational wealth transfer is already reshaping the financial landscape - and wealth managers should be prepared. Over the next 10 to 20 years, trillions in financial and non-financial assets are expected to pass from boomers to their heirs.
The impact on the financial services industry will be significant. Advisors should be integrating family estate planning into their practices now. A holistic, supportive approach covering a range of issues can create a foundation of trust that helps ensure inherited assets remain with the advisor.
Begin with a comprehensive review. At my firm, we offer clients a technical review (at no charge) of all estate-related accounts and documents. We find this review often brings in overlooked assets under management.
Expect to find problems. Our clients are sophisticated, high-net-worth individuals, yet we frequently uncover surprises. Perhaps wills and trusts have not been updated to reflect family changes, or assets have not been moved into living trusts. Particularly for blended families, the most serious problems stem from old IRA and 401(k) documents with obsolete named beneficiaries.
Prepare a clear summary. Clients can take this to their legal and tax specialists to address any problems or make suggested remedies. We find this step helps establish productive relationships with other professionals serving our clients.
Explain the findings to the family. Another advantage to these reviews: Clients often find them so helpful that they invite us to explain the findings to other family members. These meetings help us forge relationships with our clients' children and grandchildren. In any meeting with the extended family, we try to provide as much information as family members need or want - from how to read an account statement to how to establish a charitable initiative.
Serve as a buffer. Even financially savvy families often avoid discussing money. Family members may be loath to ask questions, or uncertain about balancing conflicting needs. Advisors can facilitate conversations, helping different generations clarify their expectations, responsibilities and aspirations.
Most affluent clients want to pass more than their money to the next generations. They also want to share the values that inspire them. Advisors can play critical roles in guiding discussions about achieving financial goals through family estate planning.
These initiatives help us establish lasting relationships with the next generation of investors - and can be among the most rewarding projects we take on as our clients' trusted advisors.
Ann Rieder is a managing director and partner of the Lerner Group at HighTower in Deerfield, Ill.
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