How to help clients tackle complex wealth-planning concerns

Auditor, coach, recruiter — wealth advisors must wear different hats to give clients the help they need

How to help clients tackle complex wealth-planning concerns

In a recent poll, IPC Private Wealth found that affluent Canadians are falling behind in planning how to pass on their legacies and wealth. As they face an ongoing transfer of $1 trillion to the next generation until 2026, wealthy households are finding themselves frozen and paralysed by various fears.

“In certain cases, affluent Canadians we polled were not confident in their beneficiaries’ financial literacy,” said Marie Phillips, wealth advisor at IPC Securities Corp. “In others, they weren’t aware of resources that their future heirs could rely on for support. Some were also worried about beneficiaries’ spouses being potentially unable to manage the inheritance, or possibly taking it all in a divorce proceeding.”

Celebrating our industry successes in the wealth management industry

As Phillips explained, untangling these problems can be extremely difficult especially for blended families. “Setting these goals and expectations can be challenging in these cases,” she said. “When you’re talking about the division of assets, it can really be different depending on the nature of the relationships you have. I often say fair and equal are not the same thing, so let’s have a conversation about that.”

When conversing with clients about how they want their legacy to be used and distributed, advisors have to conduct an audit to find gaps in wealth-transfer readiness. Arguably, the most important is the existence of a will — it’s been estimated that almost half of Canadians don’t have one in place. But even after that box is ticked, the advisor may have to dig deeper.  

“You’ve got to look at the status of the wills and powers of attorney,” Phillips said. “When were they written? If the client has remarried, that could be an issue; in Ontario, a second marriage voids any previously written will.”

If a will and estate plan need to be laid out, advisors often need to be proactive. The fear of instigating confrontation and conflict causes many clients to hesitate and delay discussions of how to divide assets. At times like this, Phillips said, it’s best to provide a dose of much-needed reality.

“I consider myself a wealth coach for my clients,” she said. “I believe it’s my professional duty to gently nudge — and maybe be a professional nag, as everyone calls them — in what my clients consider these difficult topics. And you do see relief on their faces as they realize that their concerns are being tackled.”

One common example is clients agonizing over the decision to divide assets among more than one child. Many freeze over the prospect of favouring one child over others, even unintentionally. However, when it comes to wealth planning, any decision is better than none at all.

“A very powerful question I ask my clients is ‘Do you want your children to still have Thanksgiving dinner together when you’re gone?’” Phillips said. “Then I can explain the lessons they should be learning from families that have been torn apart because of arguments over assets.”

Depending on the clients’ unique situations, the advisor may have to recruit more focused experts for advice. At IPC Private Wealth, an extensive network of lawyers, accountants, and other wealth-planning specialists are available for clients who wish to minimize possible issues. But no matter what wealth-planning concern is on the table, Phillips recommends one ideal time for it to be ironed out.

“Yesterday,” she said. “Wealth-transfer conversations must happen when parents and beneficiaries are still healthy and capable of calm, level-headed discussion. Otherwise, you’re going to have a lot of friction within the family, you’ll have a lot of wasted taxes, and most importantly, you’ll have a lot of goals and wishes of the client unfulfilled.”