While You Were Out… Wealth Transfer Happened

While You Were Out… Wealth Transfer Happened

for Cannon Financial Institute by Charles McCain

OMG! This is a calamity on the scale of missing your audition for Dancing with the Stars! Never go on vacation again. As FAs, we are reminded to the point of lunacy that, as the Baby Boomer generation shuffles off to Buffalo, the greatest transfer of wealth since the death of Julius Caesar will begin.

How much wealth? 59 trillion. * Smiling heirs will be hit by a flood of cash, an avalanche of stocks, a landslide of real estate. Remember the meteor that hit the earth eons ago and killed the dinosaurs? The upcoming transfer of wealth will have the same impact. Someone call FEMA right away!

But hold on a minute.  According to the Center on Wealth and Philanthropy at Boston College, this transfer of wealth from baby boomer generation to their heirs is going to occur over a fifty-five year period which only began in 2007 and will end in 2061.** So you didn’t miss it. In fact, 80% of baby boomers haven’t even retired yet. ***

But they have started. Way back in 2011, an average of 10,000 baby boomers began to turn sixty-five every day, a trend which will continue until 2030 when every member of the boomer generation will be sixty-five or older.   The big years of boomer retirement will soon be upon us.  If you’ve been standing outside of your office smoking, now would be a good time to stop that and go back to your desk.

If you’re an FA, you may be thinking, “interesting demographics but what does this mean to me?” You face the following challenge: the point of time when the idea of retirement becomes real for a client is the point where investments, taxes, pensions, insurance, personal trusts and wills meet or, as often happens, collide.  How do you go forward?

Four thoughts, says Cannon Executive Vice President and Director of Instruction, Linda Eaton, who began her long career in financial services as an FA with Merrill Lynch.

1)  “Understand and accept that neuroscience has proven people are hardwired by evolution to avoid ‘putting all of their eggs in one basket.’ And just as our primitive ancestors would not have put all their food in one place, clients today resist putting all of their assets in one place. Hence, there are usually multiple providers, making it difficult for them to see the financial picture as a whole.”

2) “Therefore,ease up on trying to get your clients to put all of their assets with your firm immediately.  When you entreat your clients to do this, you are fighting human nature. Instead, what you need from your clients is theinformation on all their assets and where those assets are located. When they discern you are willing to help them both see and manage the ‘big picture,’ you are far more likely to increase wallet share than if you force the issue.”

3) “Then once you have analyzed all of this information, you will be able to show your clients how all the different pieces of their financial lives fit together into a  coherent whole—or don’t, as if often the case.  While we in the industry often talk about ‘adding value’ to client relationships, we often struggle to define what that ‘value’ is. By creating a complete picture of their assets and then explaining to your clients how these pieces fit together, and what may be missing, you are providing a tangible and measurable value.”

4) “Finally as an experienced FA, your greatest value lies in your ability to connect these dots so your clients can actually see their asset picture as a whole.  This will immediately reveal to them whether they have an asset allocation mix which is well balanced or one that isn’t. You are the critical link in the process and it is your experience which transforms retirement dreams into reality.”

To learn more about this topic, register for our Cannon Trust I  course.

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[*] http://www.bc.edu/research/cwp.html
[**] http://www.bc.edu/research/cwp.html
[***] http://fivethirtyeight.com/features/what-baby-boomers-retirement-means-for-the-u-s-economy/#fn-1

COMMENT FROM CHARLES McCAIN: Cannon Financial Institute is the “gold standard” for wealth management training, development and consulting. I worked at the firm for many years and my colleagues were the most talented people I have ever worked with.  Last year the firm sought me out to write articles for them which I started doing in January of  2016. After a hiatus of nine years, I am pleased to report that my colleagues continue to be the most talented people I have ever worked with and it is a pleasure to be working with them again.  I take them directly from the Cannon website and the links work.  I will posting the articles I write for them on my blog after they appear on Cannon’s website. https://www.cannonfinancial.com

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Charles McCain

Charles McCain is a Washington DC based freelance journalist and novelist. He is the author of "An Honorable German," a World War Two naval epic. You can read more of his work on his website: http://charlesmccain.com/

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