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Money transferring from one pile to another

Practice Management > Marketing and Communications > Client Retention

3 Strategies to Ensure You Don't Get Lost in the Great Wealth Transfer

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What You Need to Know

  • An estimated $84 trillion in wealth will shift from baby boomers to Generation X and millennials between now and 2045.
  • Positioning yourself as an essential part of your clients’ family plans can help ensure that your services aren’t passed over when their assets are passed on.
  • Take the time to build relationships with the other members of a client's estate planning team, including CPAs, insurance brokers and estate lawyers.

It’s coming: the Great Wealth Transfer, that is. According to Cerulli Associates, an estimated $84 trillion will shift from baby boomers to Generation X and millennials between now and 2045, with 80% of heirs expected to find a new advisor once they inherit — assuming they choose to work with an advisor.

Baby boomers (those born between 1946 and 1964) hold an average of $1.2 million in household net worth, and the Great Wealth Transfer has already been a topic of heavy discussion for more than a decade. But because the oldest baby boomers have only recently turned 75, this transfer may seem far off.

Still, it’s important to consider the (literal) million-dollar question now: How can you best plan for your clients’ eventual passing without seeing their assets walk out the door?

In addition to the business implications of potentially losing a client, there’s a deeper element at play. You’ve gotten to know your clients on a personal level over the years; you’ve taken an interest in their families and you likely feel pretty invested in securing and being part of fulfilling their lasting legacy.

If any of this resonates with you, here are three things you should focus on before it’s too late:

1. Understand estate planning.

You don’t have to be an estate lawyer or have a law degree to show a genuine interest in the client’s broader planning — including the children who they’ve named as representatives in their estate planning to carry out their last wishes. It can make them more likely to view you as a valuable partner in seeing their lasting legacy through.

When you meet with your client, ask if they’d be willing to discuss their estate plan with you. Be sure to ask questions if you think something doesn’t make sense (“Can you help me understand why you think your revocable living trust can help save estate taxes?”) or if you think there may be a missing piece. (“I see that you have a health care proxy, do you also have a living will?”)

For actions that require specific follow-up, you may want to see how you can help your client dot their i’s and cross their t’s. (“Thanks for sharing about your non-probate assets. Have you prepared and filed the paperwork to set your beneficiaries, or is there a way I can help you get this done?”)

Not only can this help you learn a good deal about what a comprehensive estate plan looks like (and common mistakes clients make), but it will also show your client that you’re truly invested in what their future plans are and how you can be a part of them — which could pay dividends later.

Bottom line: It pays to understand and be genuinely interested in the bigger picture.

2. Don’t be afraid of trusts.

Trustor, trustee, irrevocable, revocable … trust planning can sound complicated. The process commonly requires coordination among multiple professional advisors and a lot of paperwork, some of which requires circulation among and approval by several stakeholders.

While trust planning might seem complex, it’s worth remembering that it’s an essential part of the Great Wealth Transfer — particularly for higher net-worth clients. Whether for tax benefits or creditor protection, trusts are a good solution to help pass on wealth between generations.

Even money that your client owns outright may pass through their will in trust for their beneficiaries. So don’t put your head in the sand if a client is willing to let you in on how their trusts operate.

By understanding trust planning, you can make yourself a valuable asset in helping ensure your clients’ estate plans move forward smoothly. For instance, say your client wants an investment account to avoid probate, but this account isn’t placed in their revocable living trust. This could subject the asset to probate after the client passes, and potentially force their loved ones to spend unnecessary time and money on the process. You can help prevent this by knowing what assets should be placed in trust and advising your client accordingly.

3. Make an effort to know your clients’ other advisors.

Your financial guidance is invaluable to your clients, but they may have other needs outside of your expertise. Your clients may have a team of professionals they turn to for these needs, including a CPA, an insurance broker, and — yes — even an estate lawyer or two.

In the course of planning an estate, a lawyer will sometimes meet with the representatives named in the plan, to have them sign paperwork or ask questions about their roles. This allows them to build relationships with your clients that span generations. The same could be true of their CPA and insurance broker, in terms of who your client looks to regularly for guidance on family finance matters.

You can create this same kind of long-lasting relationship with your clients by making yourself an essential part of their advisory teams. Getting to know their other advisors is a great start. Together, you can combine your efforts to ensure your clients have a comprehensive and robust plan in place for all of their financial, estate planning, and family needs.

With the Great Wealth Transfer on the horizon, positioning yourself as an essential part of your clients’ family plans can help ensure that your services aren’t passed over when their assets are passed onto the next generation.

Allison Lauren Lee, Esq., is director of Trusts & Estates Content and Strategic Development at FreeWill.

(Image: selensergen/Adobe Stock)


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