Taking advantage of your existing client relationships by building rapport with the families of your existing clients is an excellent way to create long-term value for your business. Research in the US found that only six per cent of households use their primary adviser for their estate planning needs1. This pattern of behaviour is likely to be similar in Australia.

The amount of wealth being transferred is growing

During the next 10 to 20 years, as the baby boomers age, it is expected that billions of dollars will be transferred to their heirs. To give an idea of the magnitude of this wealth transfer, a study in the US estimated that every year, for the next 50 years, almost US $1 trillion will be transferred to the next generation2. Of course, baby boomers may live longer lives than previous generations so not all their wealth will be transferred to their children because some will be spent on living expenses or given to charity.

Think two steps ahead

A 2014 study3, also from the US, found that advisers normally retain about 50 per cent of their client’s assets when they die – and that makes sense as often the surviving partner will already have a relationship with you. What made this study more interesting was the fact that when the surviving partner also died, the adviser only retained about two per cent of those assets. This shows the importance of building a relationship with not only your client’s spouse, but also their children as it will be the next generation that secures the long-term prosperity of your business.

The number one reason for losing funds under advice

The same 2014 study also showed a strong connection between a lack of integrated estate planning and losing funds under advice. Advisers in the US said that the number one reason for the attrition of assets under advice was caused by a client dying and their assets leaving as the estate was finalised.

Trust remains the bedrock of good advice outcomes

While the delivery channels for financial advice may be changing at a fast pace to suit younger clients, you should remember that, at its core, advisers need to build trust with their clients and that is generally best-developed, at least initially, in a traditional face-to-face meeting – so maybe don’t go completely virtual just yet.

Increased complexity means more can go wrong

The complexities of passing on super and insurance to the client’s desired beneficiaries in a tax-effective manner post the 1 July super reforms need to be carefully considered. Using the services of a company like AET, who have dedicated estate planning specialists, greatly reduces the likelihood of bad outcomes caused by oversights in the creation of clients’ estate plans.

Start now and reap the benefits later

The integration of estate planning and financial advice is only going to accelerate in the future as the complexity of tax and super regulations increases. That’s why it’s vital to devote time and resources to cultivating your clients of tomorrow, today.

For more information, please contact call a member of our Estate Planning Team on 1800 882 218.


1 Source: The "Greater" Wealth Transfer: Capitalizing on the Intergenerational Shift in Wealth. June 2015. Statistics from Cerulli Associates: Cerulli Quantitative - Update – Retail Investor Product Usage 2011.
2 Source: Why the $41 trillion wealth transfer estimate is still valid. Boston College Social Welfare Research Institute, 2003. Havens and Schervish.
3 *Sisk, Michael. 2011. How to Keep the Kids. Barron’s (June 4): S20–S21. Available at http://online.barrons.com/article/SB50001424053111904210704576357873121823708.html