The key to managing client wealth transfers

Investment advisor explains her approach to easing fears of business owners and their children

The key to managing client wealth transfers

Old-fashioned detective work is vital if advisors are to crack the biggest wealth transfer case in history.

Amy Dietz Graham, Investment Advisor, BMO Nesbitt Burns, deals with a large number of business owners and knows that the passing down of money and family values is often a flashpoint.

It’s stressful for the parents and their children, especially if lines of communication have not been properly established and all opinions sought.

Dietz Graham told WP the role of the advisor has changed and is no longer simply a case of putting a note in the will explaining which children get what. This isn’t breaking news, exactly, but the question of what a financial professional should do to facilitate this transfer is as timely as ever given baby boomers are poised to pass down large sums of inheritance.

She said: “There’s a lot more discussion that takes place. What can the money be used for? What are their wishes? How does the family feel about money? In a lot of cases, it doesn’t just go to the children, they might have charitable giving plans, for example. It’s a much broader conversation.”

Central to a smooth transfer – or one free of acrimony or confusion – is getting the children involved in the conversation as early as possible so the advisor can really dig into the issues and views so everyone is aware of what's going on.

For the young, it appears their relationship with money is more personal than previous generations.

“When I talk to some of my older clients when they get an inheritance, they feel this enormous pressure on their shoulders about what to do with their money,” Dietz Graham said.

“I think they feel that if they had had a conversation with their parents, it might have helped them understand how they should be using the money. They really want to look to their parents for guidance.”

For the advisor, setting up the children with good habits, budgets and instilling these when, for example, they get their first job is important. The worst thing a professional can do is not ask enough questions and miss key details.

She added: “I think people want to have these discussions but they are not sure how to have them. We are really good at that so it’s simply setting a meeting and setting the dialogue, and it’s amazing what comes out of these. There are a lot of 'aha' moments where kids and couples look at each other and say, ‘I didn’t know you felt that way’.

“It’s like detective work! It’s structuring the conversation so it flows that way, you cover off the topics and make sure everyone is heard about how they feel about money.”

One of the trickiest aspects for this type of wealth management is dealing with business owners, who are often used to getting their own way or who are having trouble letting go of something they have built up over a number of years. Often, having a third party in the room allows the family members to articulate their feelings better.

Dietz Graham said: “It’s hard for anybody going through the retirement process and entering into another chapter where you’re not sure what your footing [is going to] feels like.

“It’s nervous but that’s why it’s important to sit in a meeting where you can express your feelings and figure out as a team and a family what works for everybody.

“It can be overwhelming, too, for the millennial children, especially if it is sudden. Having another person sit down shoulder to shoulder helps guide them through things. We always tell clients we want to sit on the same side of the table as them and understand what their views and goals are – and to watch out for those icebergs so we can plan ahead.”

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