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A 2019 FDIC survey indicates the average American has 5.3 bank accounts, including CDs, checking and savings. Throw in credit cards and the figure is likely higher.
Traditional bank products such as the aforementioned don’t include investment and retirement accounts and adding to that roster is the growing number of cryptocurrency accounts and wallets possessed by many clients. Add it all up and it’s not a stretch to say that advisors may come across clients that have 10 or more financial accounts.
Digitization has fostered that increase with data confirming many customer would prefer to engage with financial services institutions via computers or mobile devices than going into a bank branch.
“Over the past five years consumers have grown to appreciate the ease and access of digital banking. Being able to pick up a phone, tablet, or laptop is frequently a better option than carving out time to stop by a branch during business hours,” according to Evolve Bank & Trust. “A study looking at the timeframe between 2014 and 2018 found that branch locations had decreased by 7%, with larger banks particularly closing more branches as they diverted resources to support increasing consumer attraction to digital outlets.”
With that in mind, advisors should help clients streamline digital accounts – a value-add endeavor that’s likely to be well-received by clients.
Streamlining Helps with Estate Planning
When it comes to bringing efficiencies to the array of online financial accounts possessed by clients, remember that the primary goal isn’t to bring all the accounts to one institution. That’s nice when feasible, but in many instances, it can result in tax issues due to the sale of securities.
Rather, the resulting “wins” from organizing digital accounts stem from ensuring nothing goes overlooked and estate planning synergies. That’s highly important because a new survey from Bryn Mawr Trust indicates Americans have an average of $191,516 in online financial accounts but more than three-quarters aren’t knowledgeable about digital estate planning. The situation is particularly concerning among high-net-worth (HNW) clients.
“The survey identifies digital assets as including personal records, videos, social media content, passwords, biometric data, and financial information. When asked to assign monetary values to these assets, financial data, biometric information, and business accounts ranked highest for both groups. Despite recognizing the importance of digital asset security—55% of HNW respondents express concern about their digital assets—45% of the same respondent pool have never heard of digital estate planning,” according to Bryn Mawr Trust.
The survey confirms the need for advisors to ask clients about digital accounts because some clients could have dozens of these accounts and the larger that number, the shorter odds something goes overlooked in estate planning.
“One of the most concerning findings is that nearly a third (32%) of Americans are unsure of how many digital files they possess, highlighting widespread uncertainty surrounding digital assets in the U.S., especially in light of how much value Americans place on their digital assets with an average of $191,516 and HNW individuals almost 5x that number,” notes Jamie Hopkins, chief wealth officer at WSFS and Bryn Mawr Trust.
Digital and Estate Planning Intersect
There’s no denying that estate planning is a crucial part of advisors’ broader suite of services and that digitization has taken hold of the financial services industry. But even with those factors in mind, just 39% of those queried by Bryn Mawr have heard of “digital estate planning” and just 15% consider themselves well-versed in the matter.
On the bright side, more than half of those surveyed have some plan in place for their digital accounts and many more want to get there, confirming advisors can and will play valuable roles in ensuring clients get their digital financial houses in order.
“The good news is that most Americans are planning for a future after they're gone, but digital estate planning remains a topic many are unfamiliar with, and one that some financial advisors may overlook. It’s crucial to work with experts who consider all aspects of our lives, including our digital presence, when planning our legacies,” adds Bryn Mawr Trust Vice President Steven Klammer. “To better prepare for digital estate planning, individuals should take actionable steps, such as listing their digital assets and discussing their valuation with a financial advisor. It is crucial to ensure that digital assets are incorporated into overall estate planning documents, including wills and trusts.”