Tag Archives: Baby Boomers

Inter generational wealth transfers

Preparing for wealth transfers in the trillions – a strategic imperative

It’s a lot to lose

The looming inter generational wealth transfer may receive much attention in the news but how much real preparation is taking place in the financial services market for this transfer? Not reaching out to the spouse, or children & grandchildren (heirs) of existing clients presents a real risk. Bank of America in 2011 noted that assets transferring to a spouse move to another firm 55% of the time while assets transferring to children move as much as 98% of the time.  Bank of America aptly noted the strategic imperative of reducing the risk of inter generational wealth transfers; “a very real risk of long-term erosion to their business

How much ?

Life expectancy, rising health care costs , changing tax legislation and increasing debt levels aside, the estimated value of Inter generational wealth transfers over the next many years is in the Trillions and comes by way of 2 different phases.The so-called “Great Transfer” is an estimated $17 Trillion + that is expected to shift between the “Greatest” generation to Baby boomers. A 2nd shift  (“Greater transfer“) is another $42 Trillion + that is expected to move from Baby Boomers to Generation X.  Added together or alone, these transfers present a high level of risk for financial advisors/firms to lose assets. An estimated $30 Trillion of this total of $59 Trillion is expected to shift in the next 30 years.  During the peak of the wealth transfers taking place (between 2031 to 2045) it’s estimated that 10% of the Country’s wealth will change hands every 5 years.

Where’s the risk?

Estimates vary based a lot on wealth and income but most studies indicate that too few families (less than 35%) have discussed estate planning with their primary financial advisor. Why don’t more families take the time to discuss and prepare? Certainly, the myth of estate planning only being for the wealthy continues to prevail but so does procrastination and the ‘discomfort” of the topic generally.

At the same time, why are financial advisors not more actively engaging with clients & their heirs about estate planning matters? Some evidence suggests that most advisors happen to be Baby boomers themselves and feel that they lack effective ways to both reach out to the children & grandchildren of their clients and engage proactively with clients to establish multi generational wealth transfer plans. That’s not good (!) Estate planning discussions provide great value to clients, their families and financial advisors.

Engage/Do Good/Enhance Value/Retain

Research shows that at least 60% of inter generational wealth loss is caused by poor communication and a lack of trust within the family. Encouraging clients to talk with their family members about their expectations and values before the estate planning process begins is a meaningful way to provide value. We’ve written about the idea of Ethical wills over and above traditional will planning in other posts on this blog. (We provide a place for both in LegacyTracker)

Coordinating family meetings provides a great way for advisors to introduce themselves to the next generation and show that they care. Clients appreciate an advisor that cares and demonstrates customer advocacy on a regular basis & so will the families of those clients.   By offering a technology solution that helps clients simplify, safeguard and share their important financial, legal and estate information, financial advisors and firms can demonstrate customer advocacy to the entire family. Being organized will make a real difference for an entire family in enhancing their level of emergency preparedness.  Our branded solution can ease the potential burden on a family should an emergency arise; reducing the risk of additional grief, delay or cost that often comes when families are unprepared.

LegacyTracker can also help facilitate important discussions between both Advisors & Clients as well as between Clients & their family members about important estate planning matters including final wishes. Such discussions will enable Clients and their families to more proactively prepare for the next generation & and will enable financial advisors and their firms to show additional value.

That’s a core mission behind LegacyTracker –  providing a way for Financial Advisors/Firms to reach out to their Clients/Families which also helps those Financial Advisors/Firms to ultimately hold on to assets that might otherwise move. LegacyTracker is also a technology solution that will have particular appeal to younger clients or family members who are on the look out for a technology to make their lives less complex & more mobile.

More about the what and why of LegacyTracker

LegacyTracker essentially ? A branded online solution that helps Users organize their personal financial & estate records in order to become more empowered with their own information

Longer Description:  A web-based personal financial management (PFM) & organizing tool that helps individuals and families bring all of their important information & documents  together simply and securely, allowing them to better track progress towards financial goals, be more proactive about financial/estate planning & be better prepared for an emergency.  As a branded offering, LegacyTracker provides an opportunity for Organizations to build more valued relationships with their clients, account holders, employees or members.

LegacyTracker Screenshot

Our Mission:

We are on a mission to help individuals & families simplify, safeguard, share & succeed  by

  1. Reducing the risk that users will become separated from their hard-earned financial assets
  2. Helping users GET OUT from under their paperwork so they can engage in more proactive financial & estate planning
  3. Ensuring that users are better prepared for WHAT IF situations
  4. Helping users facilitate important conversations with family & advisors about estate planning  issues

We think that organizations offering our web-based & branded personal financial/estate organizing solution to clients, account holders, employees or members is a WIN/WIN opportunity. Get in touch and connect with us to learn more: info@legacytracker.com

Financial Advice

Rethinking Client/Financial Advisor Relationships

A 2012 Accenture report delved into how changes in client expectations along with a more competitive landscape is forcing wealth management companies to rethink their relationships with clients and their own advisors.

Here’s a summary:

  • 2 Major trends are reshaping the playing field for wealth management: 1) a more competitive marketplace and 2) the changing nature of clients
  1. The market is becoming more crowded with players from adjacent industries entering including those who can leverage significant capabilities and existing relationships (banks) or their brand presence and existing distribution channels (insurance companies) or those that can offer direct product distribution without advice (Non financial firms
  2. The need for advice has never been greater, clients want 24/7 access to advice, diversified sources of advice, and less costly advice. Advice-led distribution will remain a key focus. But those that are successful will find a new ways to deliver & provide more options for delivery including direct access to information, fairly sophisticated planning tools & risk metrics

How can the client-advisor relationship evolve in response to growing consumer demand for customization and the imminent threat of new competitors ? T

he Accenture report suggests firms and advisors work to

  • Be more customer centric.
  • Enable collaboration,
  • Improve process efficiency
  • Support stronger relationships.
  • Leverage technology to reduce risk, improve compliance and make selling simpler.
  • Build deeper relationships with clients/enable advisors to be more productive
  • Integrate mobile and social strategies
  • Enhance client experiences via mobile access to data along with interactive technologies 
  • Add a human element to digital interactions
  • Add analytics, insight driven intelligence and interactive tools for advisors

Accenture reports that firms must integrate the digital experience into the overall advisory experience, to support the advisors’ role. Top advisors at wealth management firms will adapt to changing client expectations and new competitive forces by doing what they already do best and

  • Showclients that they can provide value beyond that of direct channels
  • Provide high-touch, client-focused advice that reinforces their understanding of clients’ financial needs
  • Use tools and systems to increase productivity
  • Collaborate both internally and externally to build solutions that are tailored to their clients’ personal preferences as well as meet their financial goals.

Today’s top-performing advisors have developed personal, successful strategies and tactics. but those at the top, need to work to leverage such practices throughout the broader advisor network. Accenture suggests that Firms should give adequate consideration about how to provide advisors at all levels with the tools and capabilities needed to deliver a branded, valuable and distinctive client experience.

Also, further strategies are required in order for firms to differentiate by building on their current strengths giving appropriate consideration to how they will:

  • Satisfy client expectations for a customized experience,
  • Institutionalize and promote the practices of top performers
  • Address the proposal creation/meeting preparation activities to make way for more highly tailored experiences  while cutting preparation time
  • Increase customer intimacy through branded and customized client experiences, intended to result in higher prospect-to-client conversion and higher lifetime value of relationships
  • Build capabilities to make the advisor a one-stop-shop for a complete set of financial services, including tax, estate and retirement planning
  • Complement face-to-face with self-serve interactions, providing clients with advice when, where, and how they want it

You can read more of Accenture’s Report here   and …

You can learn about how LegacyTracker can help Advisor/Relationships by contacting us

 

Financial Tech Habits of Baby Boomers

Behold yet another interesting infographic…this one on the Financial Technology Habits and the Finances of Baby Boomers compliments of emoneyadvisor.com.

No surprise, this is a US survey but luckily Canadians have much in common with our friends to the South…so we think this information is likely similar to Canadian habits and estimates.

First things first. We all know that Baby Boomers (those born between 1946 and 1964) are an important demographic. How important?  While Baby Boomers make up approximately 26% of the US population (82M people in the US), they represent 70% of disposable income and earn an average income of $50K or so a year. Their average net worth is approximately $727K. Further 46% of boomers have savings or investments exceeding $50K  & 20% having savings or investments exceeding $250K.

So yes. An important market  and yet:

  • Only 54% of Baby Boomers have a personal financial plan
  • Only 34% of Baby Boomers have a comprehensive financial plan and
  • Approximately 48% don’t have a financial advisor

As for emoneyadvisor’s surveyed facts on how Baby Boomers are using Technology…It turns out that this age demographic is keeping up (quite nicely) to younger generations after all.    (I know I’m trying hard). Baby Boomers actually spend more money on technology  than any other age group (an average of $650/month) AND Boomers have a high adoption rate for online financial management tools. 57% bank online. 35% pay bills online. 41% research financial information online. It should be of no surprise to also find that approximately 70% of this same age group buy online.

Indeed, this Infographic seems to sum it up all up and tie these survey results together quite nicely for us.   …Baby Boomers are in need of financial advise and they are ready for technology driven financial applications to help simplify their lives. It makes sense to us that A financial advisor that offers a technology driven financial application will provide Advisors/Clients (or Potential Clients) a win/win scenario. But that’s only the beginning of the Win/Win.
Fin Tech Habits of Boomers