Family on the beach

Keeping wealth in the family

You may have heard these industry insights before:

  • 10,000 baby boomers retire every day.1
  • $30 trillion in assets are expected to pass from boomers to their heirs over the next four decades.2
  • 66% of adult children change advisors upon inheriting their parents’ wealth.3
  • Wealth rarely, if ever, survives from the second to third generation.4

While these facts can certainly be a cause for alarm, they also demonstrate that the industry is rife with opportunity for us to provide much-needed value to our clients and to stand out as elite advisors.

Most of our best clients tend to be older: they have had more time to accumulate wealth and enjoy the powerful effect of compounding interest. Many also have adult children who are not often engaged with us as their parents’ advisor. If anything, the fact that we are their parents’ advisor could be working against us.

Yet the reason wealth tends to be lost from generation to generation is not because of poor investment decisions — it’s primarily due to a lack of communication among family members.5

Let that sink in for a moment.

Now, consider what we as advisors can do to help.

1. Revisit estate plans.

I’d venture to guess that 80–90% of our clients’ estate plans are outdated. Now is an optimal time to be reviewing them and reassessing what’s truly important to them. We are seeing record stock market highs and low interest rates, as well as huge estate and gift tax exemptions coupled with substantially lower income tax rates. I encourage advisors to reach out to clients and suggest a complimentary review of their documents, given all that has changed over the last few years. This gesture has helped me grow my client relationships by proving my value as an advisor as I focus on their needs.

2. Better understand the ins and outs of each plan.

I often ask my colleagues if they have copies of their top clients’ estate plans on file and truly know how they work. The answer is generally no. Turns out most financial advisors are not as involved with their clients’ estate plans as they should be. And while other professionals, like attorneys and CPAs, tend to be privier to those plans, they are traditionally not as focused on motivating their clients to review and update them — so who will? Take a closer look at your clients’ documents and use the opportunity to educate them about the importance of communication with their children — which leads me to my next point.

3. Meet with the family.

There are few things most clients care more about than whether their surviving spouse, children and grandchildren will be financially sound upon their passing. A couple of years ago, I started asking clients during routine reviews if they thought it would be beneficial for me to host a meeting to explain their estate plans to their children. Virtually all of them said yes, and most of them set up the meeting shortly thereafter. Having this interaction allowed me to demonstrate the thoughtful planning parents had put in place for generations to come. It also allowed me to articulate the importance of asset protection while positioning me as a proactive advisor who could be there to help clients and their children make tough decisions in tough times.

We are fortunate to work with some amazing clients — and by helping them firm up their estate plans, we’ll hopefully be able to guide their children and grandchildren toward a more secure financial future, too.

Remember that Lincoln has a number of resources to help us position, grow and market our practices in estate planning, retirement income planning, generational wealth planning, business owner planning and investment management programs. Visit the Empower Your Expertise page to learn more.

About the author

Logan Waters

Robert Logan Waters, CBEC®

Robert "Logan" Waters is an investment advisor with Sagemark Consulting, a division of Lincoln Financial Advisors Corp., and a Certified Business Exit Consultant. By employing a comprehensive process, Logan helps high net worth families and closely held business owners realize financial planning opportunities, as well as identify coordination gaps in their existing financial plans. Logan’s practice is concentrated on business exit and succession planning, including wealth accumulation and transfer strategies. By focusing on the unique needs of the business owner, Logan is able to bring a depth of knowledge to help them protect, grow and transfer or sell their business interests while meeting their objectives for financial independence.

Robert Logan Waters is a registered representative of Lincoln Financial Advisors Corp., a broker/dealer (member SIPC) and registered investment advisor. Robert Logan Waters is securities licensed in North Carolina, South Carolina and Virginia.