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Financial Planning > Trusts and Estates > Estate Planning

The major estate planning market you may not know about

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The “Family Wealth Transfers Report,” an annual survey of the world’s ultra-high-net-worth individuals, is newly out from the people at Wealth-X. Sponsored by National Financial Partners, the report highlighted interesting trends concerning the aging of the UHNW population. These trends are important for estate planners to be aware of.

It should come as no surprise to advisors that affluent people tend to be older. The worldwide ultra-high-net-worth population, defined as those with assets of $30 million or more, averages 59 years of age. Billionaires are, on average 63 years old. (All these figures are global rather than U.S.-only.)

A full 25 percent of the HNW population is in their 60s. Another 13 percent of them are in their 70s. And 6 percent of them are in their 80s. That may seem like a gentle aging curve, but the distribution of wealth among those groups is far less gently distributed.

Through most of the age cohorts, the amount of wealth held by UHNW individuals stays fairly steady. Those in their 40s have an average net worth of $111 million. And those in their 50s actually have slightly less: an average of $109 million.

For those in their 60s, the number jumps to $146 million; and up to $195 million for those in their 70s. But for those over 80, the figure takes a quantum leap — to $305 million.

These findings have important implications for estate planning practices. The most fruitful clients, and the easiest ones to attract, tend to be the younger ones, who have half a lifetime ahead of them and may not have even thought about their estate planning needs. But it’s hard to ignore the fact that the elderly in this cohort have three times as much in assets as the younger generations.

Many advisors assume that the older affluent have taken care of their planning needs, but there are avenues into this area of business. A recent survey conducted by Cerulli Associates showed that 58 percent of all households with more than $5 million in assets are working with multiple financial advisors. Even if they have professional advice, they’re open to more.

If they’re not immediately taking on new advisors, this cohort is definitely considering its options. According to the Institute for Private Investors, the wealthy are talking with eight to ten different advisors when they’re searching for someone to help handle their money.

This generation certainly isn’t looking for estate planners on the Web, so it takes good old-fashioned personal marketing to get on their radar screen. They are likely to have strong personal relationships with other advisors, such as attorneys and tax planners. This is an area in which strategic alliances with other professionals is crucial.

One important question to ask these professionals: Are any of your clients undergoing dramatic life changes? The elderly not only get widowed; they get divorced and remarry.

Their children also get married and divorced. Grandchildren and great-grandchildren are born. All these changes necessitate estate plan revisions. And elderly clients may be looking for fresh help with these issues.

One other thing about that older group: Their assets tend to be much more liquid than is the case for younger generations. The Wealth-X survey found that UHNW people in their 50s have an average of $27 million held in liquid assets.

But for those 80 and above, that number more than triples, to $92 million. The elderly not only have more money than the younger generations, but they tend to keep more of it in liquid assets —30 percent — easily the highest of any age cohort.

The elderly market is not an easy one to break into. But between their penchant for multiple advisors and the immense size of their wealth, it can be well worth the effort for estate planners to approach it aggressively. Even one such client can make a huge different to an estate planner’s practice.