Advisors who handle the wealth transfer from a client to the client’s beneficiaries have, for at least a short time, a working relationship with those people who are receiving the inheritance.
Whether that relationship goes beyond the machinations of the inheritance is an important question for those advisors. It would be nice if the momentary relationship extended into a long-term relationship with the beneficiaries, who may or may not be familiar with the advisor involved in the transaction.
But such circumstances rarely work out that way.
Spectrem’s study about inheritance and eventual wealth transfer explains how advisor usage is impacted by the process of receiving an inheritance. The study was conducted among investors from the Baby Boomer generation who received an inheritance of at least $500,000 in the last five years and who had a net worth of at least $1 million, including the inherited amount.
Since Legacy 2.0: Baby Boomers and Inheritance covers older investors who recently received an inheritance, those investors probably already have a financial advisor relationship if they want to have one. An advisor responsible for the logistics of distributing an inheritance will be an additional voice for those investors, and may be seen as an unnecessary addition to their investment advice team.
Among the inheritors surveyed, 38 percent maintained some relationship with the advisor of the person who provided the inheritance. That’s a notably high percentage of new business for the advisor who assisted in the distribution of the states. The extent of that relationship is not investigated in the study.
Six percent of inheritors who had an advisor kept their original advisor but began working with the one who handled the inheritance as well. And 9 percent of inheritors had no advisor when they received the inheritance but began using one when they received the new assets.
From a negative point of view, 62 percent of inheritors did not extend the relationship with the advisor handling the distribution of the state beyond the process of the inheritance.
For some people, receiving an inheritance of half a million dollars or more would require some level of assistance in determining how to invest those funds. And 42 percent of inheritors did in fact sit down with their financial advisor to discuss what they were going to do with the additional assets. Nineteen percent discussed the inheritance with the advisor who handled the estate distribution.
But, a sizable percentage, 44 percent, did not discuss their inheritance with a financial advisor.
©2019 Spectrem Group
Keywords: inheritors, investors, advisors, Spectrem, legacy, Baby Boomers