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With thousands of baby boomers retiring daily and when accounting for the fact that the generation spans the birth years of 1946 to 1964, meaning a fair amount of boomers are already over 70, it would stand to reason that estate planning has been addressed and related conversation have been had with family members.
Actually, that’s not the case and that’s stunning because boomers are the wealthiest generation in history. It’s their wealth that underpins the great wealth transfer and while that wealth is measured in the tens of trillions of dollars, many boomers don’t have solid estate plans in place. Nor have they had “uncomfortable” conversations with their heirs regarding inheritances, long-term care and related issues.
The silver lining is that boomers’ estate planning procrastination, which comes in varying forms, cements the need for advisors. Advisors with boomer clients should be highlighting the practice’s estate planning and tax services. Consider it a “soft initiation” of conversations that are viewed as awkward, but vital nonetheless. Data confirm advisors should be doing that and if they’re not, they should change that strategy as soon as practical.
Data Confirm Worrying State of Boomer Estate Planning
Data from a recent Fidelity study indicate the time is now for boomers to tap advisors for estate planning assistance and related issues. The survey notes 64% of boomers haven’t talked with family members about how assets will be passed on and 71% haven’t discussed with advisors the issue of being transparent about their wealth with relatives and heirs. More than two-thirds haven’t addressed end-of-life care with family.
“Putting off generational planning discussions can have unintended and potentially harmful consequences in family relationships. It can lead to planning and decision making that excludes impacted individuals,” notes Fidelity. “It can mean delaying conversations until forced into them at an emotionally charged moment in the future. Or it can mean missing out on opportunities for intimate conversations that bring your family together.”
Obviously, there are complexities involved with passing on assets, but as Fidelity notes, there are differences between “complex” and “complicated.” Neither are necessarily negative but complex as it, pertains to transitioning wealth among family members can sound burdensome. Advisors can help clients navigate complexities to achiever desirable wealth transfer outcomes.
“When families and financial representatives discuss the complexity of boomer lifestage circumstances and planning, they can expand opportunities for generational family engagement,” adds Fidelity.
Transition Plan of Attack for Boomer Clients
As noted above, there are complexities associated with estate planning and shifting assets from one generation to the next. That means a solid game plan is needed and advisors can develop those plans by focusing on various topics. Going subject-by-subject can result in a plan that in its entirety is more valuable than the sum of its parts.
Those parts include conversations around transitioning of control and enhanced transparency. The role of women also needs to be emphasized. As Fidelity notes, two-thirds of boomer households have at least one woman present and 70% of married women will outlive their spouses.
Enhancing wealth transfer and end-of-life plans should also include perspectives from their younger family members while accounting for the changing complexion of the modern family. Explicit directives regarding long-term and end-of-life care also need to be part of the picture as does advisor succession.
“In the next 10 years, 37% of financial representatives will retire and the industry will see a loss of one-fifth of the total number of financial representatives,” concludes Fidelity. “After the change, 50% of the remaining financial representatives will be between 30 and 40 years old. 85% of investors say it is important to them that their financial representative has a succession plan, yet only 40% of them know that their financial representative has a plan.”
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