The economic growth and accumulation of wealth over the past 50 years has been astounding. Fortunes have been made and dynasties built and as the baby boomer generation enters retirement their children are set to inherit more than any generation in history. As a result, conversations on the transfer of wealth are essential. In the current climate of market unpredictability and economic uncertainty, the ability to manage financial wellbeing has never been more critical. Wealth professionals have an integral role to play.
Luckily, according to a recent TD survey, Canadians are more willing than ever before to speak about money, which makes an advisor’s job slightly easier. “I’m pleasantly surprised by the results because talking about money was once considered impolite or tacky, but 65% of Canadians don’t think it should be socially awkward or something to avoid discussing,” says Cynthia Caskey, Vice President and Portfolio Manager at TD Waterhouse. “There’s nothing more important than understanding where you stand, what your money is going to do for you, and what that means for your loved ones. So, making sure those conversations happen is really important.”
Although the survey found that parents are getting more comfortable with sharing their estate and inheritance plans with their adult children, advisors still have to help facilitate conversations between family members. 60% of Canadians consider their financial skills to be ‘fair or poor’ and some may feel awkward talking about the monetary decisions they’ve made during their lives.
But looking back to past mistakes really achieves nothing. “Clients need to be encouraged to think deeply about what they’re trying to achieve, and it’s best to not do this alone,” Caskey says. “Planners have an important role to play in mapping out current assets, planning how to distribute them, and being an educated sounding board.”
Caskey believes these changing attitudes are also forcing financial advisors to adapt. “It’s not just about investment choices, it’s about understanding what clients need from their wealth and then tailoring a plan for the unexpected, whether that’s protecting their assets or their income,” she says. “Clients are living longer, more fruitful lives but many of us are going to face chronic conditions. Health and wellness is also key part of understanding what your money has to do for you and your loved ones. Advisors can play a role in helping clients be honest and straightforward about their situations.”
Caskey has noticed increasing numbers of clients bringing their adult children into meetings, which is a very positive sign. Although intergenerational meetings will help an advisor build the bigger picture of the client’s situation, the advisor must take the lead from the client because of the obvious privacy concerns. “Sometimes, there are mental acuity issues that come to the fore, so the more continuity we have as our clients get older, the better,” Caskey says. “Having a power of attorney in place could be a very important landmark as you go through the client journey; to make sure they’re protected no matter what.”
Caskey believes that properly getting to know your client and then setting realistic goals are the two key drivers for any successful advisor-client relationship. “It’s all about understanding what is important to a client and what they need to achieve; set some target dates and then work back to create a path,” she says. “Then, work out the rate of return that your clients need to achieve their goals instead of chasing markets and taking on unnecessary volatility.”
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