How to help clients manage intergenerational wealth transfers

Raymond James poll suggests key steps advisors should follow

As we enter a 20-year period in which an estimated $84 trillion in wealth will be passed down, your clients need you – more so than ever.

“Financial advisors are in a unique position to guide the wealth transfer process, from recommending the appropriate professionals to walking a client through next steps,” says Joe Weaver, president of Raymond James Trust.

So what are the steps you should advise clients on? A recent Raymond James survey offered clear clues, asking investors with at least $500,000 in investable assets what matters most to them when it comes to intergenerational wealth transfers.

1. Create a documented plan

Your first priority is to coordinate with your clients and their attorney to capture your clients’ planned transfers in appropriate legal documents.

“The most important factor in executing a smooth transfer of wealth is having a documented plan in place,” says Weaver.

As part of the process of recording your client’s intentions, you can also advise them on how to fulfill their philanthropic goals. A philanthropic impact is something that more than half of survey respondents want their legacy to have.

You’ll also want to suggest to your clients a tax professional who can ensure their plan transfers wealth in a tax-efficient manner. More than 9 in 10 survey participants said that tax efficiency is important in the transfer of their wealth, but 37% do not have a plan to do this, and only 26% have consulted tax professionals to achieve it.

You can be the one that connects them to the right tax professionals.

2. Help them communicate their plan

Once you’ve helped your client create a plan, you can advise them on how to share the details with those affected.

“The most common reasons for a breakdown in a client’s plan are, first, the absence of preparation and taking the time to put appropriate documents in place. Second is not thoroughly communicating their intentions to those impacted.” Joe Weaver, President, Raymond James Trust

While Hollywood often portrays the reading of the will as a dramatic event full of surprises for the heirs, your clients should share the details of their plans before they die. An open discussion can help avoid any strife among their heirs, a goal that 87% of survey participants held.

You may also want to make your clients aware of the option of communicating their values and wisdom to their descendants through a letter and/or video.

“It’s difficult to memorialize your values and wishes in a legal document,” Weaver explains. “So one solution that’s becoming more prevalent is the inclusion of a legacy letter. A client can sit down and write about the lessons and stories that they want to be sure reach the next generation. Then the letter is either attached to the planning documents, or more often, read and recorded over video to be passed on.”

3. Regularly revisit and update the plan

The final step in advising clients on wealth transfer is regularly working with them to update their documented plans and to help them communicate any updates. “It’s critical for your clients to regularly revisit their plan over the years to make sure it’s properly representing their current wishes,” says Weaver.

Regularly reminding your clients to update their plan and communicate updates is so important because our survey found that only 45% of respondents are “extremely transparent” with their heirs.

Your own regular communication with your clients about wealth transfers can also help build your relationship with them as well as avoid any disappointment in your services. Just like their heirs may be counting on them, your clients are counting on you.

Raymond James & Associates, Inc. is affiliated with Raymond James Trust, N.A.