Effective wealth transfer is a common goal of investors, yet they face numerous challenges to fulfilling this objective in both the short and long terms. With total bequests projected to exceed $84 trillion among U.S. residents by 2045, overcoming these challenges is a major issue facing financial services providers, according to Cerulli Associates. Financial advisors are uniquely positioned to address these challenges by offering comprehensive estate planning and aftercare services.

Navigating the Great Wealth Transfer

The initial challenge of successful wealth transfer for financial advisors is facilitating timely and useful communication between current clients and beneficiaries. Many investors are reluctant to share details even with the heirs to whom they intend to pass along their wealth. However, Cerulli notes that family meetings and regular communication is considered the most-effective wealth transfer planning strategy.

While sharing this information might create discomfort in the short term, clients will realize that making sure their successors are educated and informed is the best way to ensure that their legacy, financial or otherwise, continues.

Bridging the Communication Gap

Collaborative estate planning tools, such as Cadence’s Legacy Planner, are designed to address the communication gap between bequestors and successors, and ensure that executors and beneficiaries have access to all necessary information when the time comes.

Financial advisors can use these services to foster deeper, more transparent relationships with their clients. By encouraging clients to document and share their estate plans, advisors not only gain insight into clients’ succession plans, but can also help ensure that heirs are well-informed and prepared for a smooth transition of wealth.

 

Building Lasting Relationships

Understanding how and where future bequests are held is another key element of wealth transfer. Selecting a financial advisor is a deliberate choice, and the choice to continue that relationship is often a function of the level of confidence and trust the client has placed in that advisor. Being transparent with the cost-benefit analysis of working with a professional advisor, and helping inheritors understand the value, can be a significant factor in building trust and  fostering these relationships through the next generations.

Wealth transfer is a primary concern for clients, especially those with a high net worth, and advisors are in a unique position to encourage, or even help facilitate these discussions to take place as early as possible, while all stakeholders, including bequestors and heirs, can participate. By incorporating comprehensive, collaborative estate planning into their suite of offerings, financial advisors can facilitate these crucial conversations and documentation processes. This not only helps clients and their families but also strengthens the advisor’s role in managing multi-generational wealth.

Aftercare Services: Encouraging Successors to Plan Their Own Legacies

When a person passes away, their executors or beneficiaries may come to the financial advisor not only seeking advice about practical aspects of dealing with the loss, such as communicating with companies and the government, but may also want to share their feelings as they work through their grief. Cadence’s solution for helping successors with both the logistical and emotional aspects of loss is an ideal tool to redirect beneficiaries, in a compassionate and supportive way.

More importantly for advisors, aftercare services present a unique opportunity to engage successors in thinking about their own legacy planning. As they navigate the responsibilities and complexities of managing a loved one’s estate, they are prompted to consider their own future and the steps they need to take to ensure a smooth transfer of their assets.

By incorporating aftercare services into their offerings, financial advisors can provide invaluable support to clients’ families while simultaneously encouraging the next generation to start their own legacy planning. This not only strengthens the advisor-client relationship but also positions the advisor as a trusted resource for future planning needs.

Conclusion

The impending great wealth transfer presents both challenges and opportunities for financial advisors. By leveraging comprehensive estate planning and aftercare services, advisors can help clients ensure a smooth and informed transition of wealth. This not only addresses the immediate logistical needs of heirs, but also fosters long-term relationships with the next generation. Financial advisors who embrace these services will be well-positioned to retain assets and continue to provide value to their clients and their families for generations to come.