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Senior wealth advisor Nicole Asher of Greenleaf Trust

Financial Planning > UHNW Client Services

For This HNW Firm, It's Crunch Time for Estate Planning

By John Manganaro

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While there’s seldom a “quiet time” for wealth management professionals, this month is a busy one for the industry — especially for wealth advisors focused on tax issues and legacy planning.

In fact, according to Nicole Asher, a senior wealth management advisor at Greenleaf Trust, advisors with high- and ultra-high-net-worth clients are confronting a swath of exciting challenges and opportunities.

As Asher explains, volatile markets, questions about economic growth and the fact that the current estate tax framework is set to expire after 2025 makes this a particularly challenging time for wealth advisors and their clients.

Still, she says, there’s never been a better time to be in wealth management, given the demand for legacy planning and related services. Asher, who boasts more than 30 years serving clients, shared her perspective during a recent interview with ThinkAdvisor, summarized below.

THINKADVISOR: Tell us about your firm, its ownership structure and why this structure matters to your high-net-worth and ultra-HNW clients.

Asher: Yes, and thank you for the question. Our firm is organized as a privately owned bank here in Kalamazoo, Michigan, and we have locations across the state and in Delaware.

As a bank, we are unique in that we focus exclusively on investment management and trust services for high-net-worth families, and we serve some endowments, too. There is also a dedicated family office arm that handles clients with $25 million or more in assets.

This is all important to our clients for two main reasons. First, we don’t sell products and we don’t offer banking services like checking accounts, savings accounts or loan products, and as such, we have no conflicts of interest in the planning process.

Second, our private ownership is organized in such a way that we can effectively guarantee for our clients that we will never be bought or sold. This means we will always remain product agnostic and that we are in a position, as a firm, to help our clients steward their wealth from generation to generation.

They can be confident that we aren’t going to be bought out by some big bank at a future date, because when a firm like ours is bought, that can happen. Our clients know we aren’t going to be pushing products to the next generations, and we don’t accept kickbacks from anywhere.

All of our clients are fee-based. This was the vision of our founders, because they had experienced just that issue in their own lives.

What are the big challenges your clients are grappling with today? The markets? The estate tax outlook?

Yes, to begin with, it is a challenge to not know what will be happening on the estate tax front come 2025 or 2026. That gives our trust and estate planning teams a tight window to get what can be very complicated plans into place, and then we just don’t know what will happen.

A lot of our clients, given our $2 million minimum, have substantial wealth and an interest in charitable giving, in addition to legacy goals within their families. On the trust and estate side, our teams are busy looking for attractive charitable gifting opportunities, for example, and they are taking advantage of the current annual exclusion amounts for children.

With respect to the markets, things haven’t been too challenging, because we are a firm that believes in staying the course, and we train our clients on this.

What has allowed us to navigate this environment in the markets is that we have been aggressive about setting the right expectations. We made sure after 2021, with the amazing market returns clients saw, that they understood such a year is atypical and that the bull run wouldn’t continue forever.

As an investment person, I have learned from experience that clients need to know in advance what the highs and lows can be in their portfolio. If we are having a discussion and they can’t accept a certain degree of downside volatility, that’s when it’s time to make changes and dial back risk.

What can you tell us about the ways high-net-worth and UHNW clients tend to react to significant market losses? Presumably they aren’t at risk of running out of money even after a bad year, but does that miss the point?

It’s an interesting question. Generally, I would say, high-net-worth people respond with the same fears and emotions as more middle-income and mass affluent people. They might lose $2 million in portfolio value in a year like 2022 instead of $200,000, and they feel the sting.

While people with larger portfolios have the same concerns about losses, they do often have different goals. So, instead of being worried about their own personal retirement, they are worried about the future generations of their families — or they have a charitable plan and they don’t want to see their giving power reduced.

So the goals are different, but the feelings are largely the same.

What can you tell us about the art and science of serving a highly wealthy family across generations?

One place to start is to point out that parents often want their kids to have the same outlook and beliefs as they do about work, money and life. Obviously, that doesn’t always happen, and it can be a source of great stress and consternation for our clients.

For many people who have been very successful or who have themselves inherited substantial wealth, the legacy planning goal centers around a desire to really pass on a good moral compass, in addition to the wealth.

To get this right, regular family meetings are key, but at the same time, you can’t force them if the time isn’t right. Both the kids and parents have to be ready for what can be challenging conversations.

One interesting thing I’ve seen in my career is that, in many families, you have different kids with very different personalities, life goals and visions about what wealth means. Some kids may be very serious and studious about what wealth means, while others in the same family can be more lax.

Broadly speaking, clients are often concerned that their kids aren’t being as diligent with money as they themselves were when they were younger. Often, the parents have given their young-adult children a really great head start in life. That can lead to great insight about wealth in the second generation, but it can also create issues.

In some more extreme cases, you might have to use trust mechanisms and really not give the control of the legacy in one fell swoop to the next generation. Sadly, everyone in this line of work has seen the cases where people spend through tremendous amounts of money really quickly after their parents die.

One unique response I’ve seen is when parents match what their kids are earning, for example, if there are concerns about their children not seeking gainful employment.

Of course, there are also many wonderful stories where the kids learn really well from their parents. In fact, I have some families I’m working with now where we have the third and fourth generations coming up, and that’s so wonderful to see.

Would you say wealthier people are uniquely focused on tax mitigation issues?  

Yes that’s often the case, but a client’s unique outlook on taxes can be very nuanced and specific.

In fact, some people are very eager and willing to pay their fair share or even more than their fair share. They see paying taxes almost as a patriotic thing that complements their charitable giving, and so they don’t push us to do all the possible tax loss harvesting, for example.

Across our clients, I would say that 80% probably want to save all they can on taxes, and so yes, it’s a big job for us as their advisors to find ways to mitigate capital gains taxes.

(Pictured: Nicole Asher) 

John Manganaro

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