It used to be that as a financial advisor you were doing great if you worked with your client, planned a good retirement for them and an inheritance for the children and maybe even the grandchildren. But those days are changing, giving rise to a new field of expertise: the legacy advisor.
Consider the increase of ultra high net worth families in the U.S. The number of U.S. billionaires, according to Investment News, has gone up from 490 in 2010 to 747 in 2017.
That’s the kind of wealth that will stretch on for generations. And while many will not work with billionaires, the reality is that the number of millionaires and high net worth individuals has also grown.
In March 2018, CNBC reported that the number of US households with a net worth of $1 million in investible assets not including the primary residence was over 11 million individuals.
Similarly, those with a net worth up to $25 million increased to 1.35 million households and those with a net worth above $25 million grew to 172,000 households.
Wealth to last for generations
The kind of wealth that has been accumulated in the U.S. has the ability to last for generations—four to five generations.
From a planning perspective, then, things have changed. It’s not just a plan for retirement and a little inheritance. It is the idea that planning must take into account future generations.
As a result, more firms must incorporate estate planning into their expertise, or they must seek collaborative partners with whom they can work. Dynasty trusts, charitable trusts, GRATs, donor advised funds should all be tools that are on the table.
More than financial expertise: the legacy advisor
But additionally advisors need to offer not only financial tools but also legacy planning tools. Legacy planning focuses on the soft aspects of planning—preparing heirs and enhancing communication and family health.
And many families should consider adding another expert to the advisor team: a legacy advisor (or coach).
Most financial advisors are not engaging the beneficiaries and as a result many of those advisors will be fired when the wealth creators pass away.
Sherman goes further to argue that the financial advisor is not just a fiduciary of the assets but should work to ensure the success of the entire family. That includes the complete web of family relationships, including the family dynamics.
Sherman offers several keys to advisors who wish to retain the family business and fulfill the larger fiduciary opportunity, but one in particular stands out:
Offering a new resource, a family coach, for clients in need of a family dynamics specialist who can align the family around its wealth, especially as inheritance comes into view.
The number of legacy advisors is increasing. A skilled legacy advisor can align the family around the larger perspective of wealth—a healthy family and a healthy life, including spiritual life.
It’s a unique and wonderful privilege: to plan and prepare for generations.
Photo by Sergey Zolkin on Unsplash
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Published June 11, 2019
Topics: Family Legacy