Do wealthy investors care as much about the future as they do the present?
Some certainly do. There are investors who spend as much time looking ahead to how their children and grandchildren will be provided for as they do paying attention to how their net worth is growing day to day.
But there are others who concentrate on the daily growth of their portfolio and put the future on the back burner.
Spectrem’s third quarter wealth segmentation series report Advisor Relationships and Changing Advisor Requirements determined how the balance between present and future concern plays out in the investor-advisor relationship.
This is best indicated by the percentage of investors who have already spoken to their advisor about estate planning, the ultimate in future considerations, and those who plan to seek advice on estate planning in the future. It is revealing to see the percentage of investors who discuss estate planning with someone other than their primary financial advisor.
“Once an investor has reached a level of financial stability, it makes sense they would consider how their estate is going to be handled when the appropriate time comes,’’ said Spectrem President George H. Walper Jr. “Many wealthy investors obviously consider the legal aspects of wealth transfer and discuss their estate with their attorney, but financial advisors can also be consulted in order to make the investment strategy consistent with the estate plan.”
Among Millionaire investors with a net worth between $1 million and $5 million, 51 percent have established an estate plan, and 25 percent plan to have that conversation sometime in the future. A surprising 24 percent of Millionaire investors stated they do not need these type of advice.
However, of the 51 percent that have already discussed estate planning, 29 percent discussed it with someone other than their primary advisor. Whether it was an attorney or family member, more investors are talking estate planning outside of their relationship with their primary advisor.
Wealthier investors are more likely to have conducted estate planning already. Among Ultra High Net Worth investors with a net worth between $5 million and $25 million, 68 percent have already established an estate plan and 11 percent plan to seek that information in the future. The percentages of UHNW investors discussing estate planning with someone other than their primary advisor resemble those of Millionaires: 41 percent have discussed the topic with someone other than their advisor and 27 percent have done so with their primary financial professional.
Interestingly, some UHNW investors under the age of 49 seem to be biding their time when it comes to estate planning. While 14 percent have discussed the topic with their primary advisor and 25 percent have discussed estate planning with someone else, 29 percent are planning to seek the information sometime in the future.
Among Millionaire investors, there is a greater frequency of using a primary advisor for estate planning purposes when the investor is more dependent upon the advisor for all investment needs.
Business owners, perhaps thinking they want to assure their business is handed down to the next generation in the manner they want, are more likely than Millionaires in other occupations to have discussed estate planning already, although they are far more likely to have done so with someone other than their primary advisor.