The Changing Face of Legacy Planning

The Changing Face of Legacy Planning

The many changes in the industry are having a big impact on how advisors do business.

The rise of the robo-advisor is offering competition to traditional advisory models, and wealth management professionals are looking for new ways to differentiate their services. Offering integrated, multi-generational wealth management is one way advisors are trying to add value for clients. This type of wealth management includes tax, investment, insurance and fiduciary planning, but also adds qualitative elements such as assistance with philanthropy and help with family dynamics and governance issues as well.

There are three types of models to offer this type of service: 1) the family office; 2) the private bank, and 3) independent advisors. Each as advantages and disadvantages, but all require coordination across various disciplines.

The family office is typically a model chosen by families with $100 million or more in assets, although families with as little as $20 million in assets might consider forming a multifamily office with several other families. These offices are typically staffed by professionals, although family members may fill key positions. Family offices tend to develop certain core competencies, and then outsource the remainder of functions. As the family office runs like a business, it can in theory work with multiple generations and maintain continuity.

Private banks might serve families with only a few million in assets, or considerably more. Since private banks are built to last for generations, they are designed to offer continuity of service. The offer integrated solutions across disciplines, but may engage outside professionals as well. Internal teams will work with both internal experts and external resources to deliver comprehensive services to wealthy families.  The primary disadvantage may a slightly lower degree of the personal touch families desire, as trust officers and other professionals come and go. Moreover, many private banks are part of public companies and the need to act in the shareholders’ best interests may sometimes conflict with client needs.

Independent advisors can work with other professionals across disciplines to create integrated teams, typically a wealth manager, life insurance professional, tax attorney and CPA.  Services are billed individually, and some team members may accept a fiduciary standard while others do not. The frontline advisor coordinates with the other members of the team to create a plan and deliver the services required, and must also act to maintain and modify the plan over time. The risk in this situation is that the responsibility for continuity can lie in the hands of one senior professional.

As advisors position themselves to compete in the legacy planning market, there are many questions to consider. If you’d like to read more about how to position your practice, please visit:
Legacy Planning Is Changing | Wealth Management

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