A huge wave of wealth transfers is expected in the coming years and financial advisors who prepare for it will be most successful.
The Institute for Preparing Heirs was created to focus on the transfer of trillions in dollars of wealth that will be inherited by the next generation, and the issues that will come along with it.
“With the tax laws that are out there now, a good part of the wealth transfer will happen while the parents are alive,” Diane Doolin, a senior vice president of wealth management at Morgan Stanley Wealth Management and a founding director of the Institute for Preparing Heirs, said at one of the institute’s recent conferences.
Because family dynamics can get in the way of family harmony, wealth transfers are often unsuccessful. Doolin spoke about the need for advisors to help with family planning to overcome such obstacles.
Transfer issues are a vital issue to members of the older generation, who have accumulated significant wealth over their lifetimes. “Typically, parents in their 60s and older are most concerned about preparing for a smooth and successful transfer of wealth to their children,” she said. “Clients want solutions.”
Some clients decide to let the children learn how to deal with new wealth after they’ve passed away, she said. However, the larger majority of those with significant wealth want to leave a valuable legacy with their children—they just need help getting the conversation started.
Advisors who get a head start on planning for the large wealth transfer by providing services that go beyond just investment advice will yield numerous benefits for their practices:
1. Differentiation: Advisors will have something substantial in their value proposition that competitors do not—a competitive advantage.
2. Network expansion: Partnering with other professionals to help clients as a team will lead to more potential business for all involved.
3. Better relationships and more of them: Advisors will build trust with their clients by touching on the issues that matter most to them. This will lead to high client satisfaction, strong client retention, retention of multiple family generations and more client referrals.
Professionals who can help advisors deliver these services include accountants, estate planning attorneys, trust officers, bankers, family business consultants, insurance specialists and philanthropy advisors, according to the institute.