The majority of financial advisers are missing the boat when it comes to having important conversations with clients about passing wealth on to the next generation — thereby losing a big opportunity to hold onto those assets after those clients die, according to a new survey.
While 71% of investors share with their advisers who they have named as beneficiaries, and are willing to talk about what happens to their money when they die, just 42% say their advisers have ever asked them what will happen to their money when they die, according to J.D. Power's 2015 U.S. Full Service Investor Satisfaction Study.
Mike Foy, director of the wealth management practice at J.D. Power, said there are a few reasons why advisers avoid talking about the transfer of wealth with clients.
"It's just potentially an awkward topic — raising it entails an acknowledgement of the client's mortality and that's not necessarily an easy thing to talk about," Mr. Foy said.
But there's also the possibility that many
advisers are looking at retirement themselves and may not be looking to work with the next generation of clients, he added.
"The firm's interest is to retain assets, but the individual adviser may not see it as a kind of optimal use of their time," Mr. Foy said.
Among investors who have named their beneficiaries, about a third of those beneficiaries already have an account or product with their benefactor's advisory firm. But that number increases by 24 percentage points among clients who have been asked by advisers about the financial needs of those beneficiaries.
These next-generation beneficiaries, many of whom could be millennials,
may need help when it comes to inheritances. According to Accenture, between 2031 and 2045, 10% of total wealth in the United States will be changing hands every five years. It is estimated that $30 trillion will be exchanged in financial and nonfinancial assets in North America from the boomer generation.
