Skip navigation
money-sacks-man-robot.jpg Feodora Chiosea/iStock/Getty Images Plus

How Financial Advisors Can Seize Opportunities in the $129T Wealth Transfer

Advances in AI and automation have made it possible for advisors to effortlessly add trust and estate administration services to their practices.

Baby boomers are expected to facilitate the greatest wealth transfer in American history over the next 25 years. Once estimated to be $72 trillion, the mass distribution of personal assets is now projected to reach $129 trillion.

For financial advisors, the significant accumulation of wealth by their boomer clients is a double-edged sword. On the one hand, it’s gratifying and shows the impact of their hard work and commitment to growing their client’s nest eggs. It’s something to be proud of and the reason why advisors are in the business they are in—to help secure their client’s financial futures. On the other hand, a high percentage of those assets will vanish from their practices once their clients pass on, and those assets are distributed to family members, charities and beneficiaries.

A 2010 report widely circulated during the time I worked as a private wealth advisor suggested that 70% of children fire their parents' wealth advisors. This created anxiety amongst the advisor community, and many of the big investment firms engaged consultants to create strategies to stem the exodus. The result was a three-pronged strategy driven by a common thread to address the preferences of the younger generation: increase investments in technology, hire younger advisors and involve the next generation in parents’ planning discussions.

Makes sense, right? Yet despite their best efforts and intentions, these strategies did not produce the desired results, and firms of all sizes are left scratching their heads. Investment professionals continue to tell us that children often still fire their parents’ advisors.

What goes wrong? Having been on both sides of the equation as an advisor who lost assets when the primary contact of the household passed away, and as a beneficiary of an intergenerational transfer of wealth, I believe the major flaw in the current strategies identified above is that they fail to account for one thing. When there is human passing and a time of need to settle the estate, often, the advisor is nowhere to be found. It’s almost as if they’re telling a bereaved potential customer: we did a great job for Mom and Dad; come back and see us in a year or two when the estate is settled, and we’ll do the same for you.

Empathy published the first of a series of groundbreaking reports that uncovered the three things that grieving families need most after a loved one passes: guidance on the estate administration process itself, relieving the manual work required during the estate administration process, and reducing professional fees associated with the estate administration process.

Wealth managers have a unique opportunity to highlight their digital capabilities during the estate administration process. Advances in technology like AI and automation have made it possible for advisors to effortlessly add trust and estate administration services to their practices. Unlike traditional estate planning, serving as an administrator does not require an advisor to become an estate planning specialist. Rather, with the right technological support, they can play a critical role in quarterbacking the estate process, ensuring that their client’s wishes are carried out as planned, and showcasing their skills to beneficiaries—their potential new clients. Here’s how:

Provide them with a roadmap: Empathy’s report highlighted that most individuals who were called upon to help administer the estate simply did not know what to do. They lacked guidance or were afraid of making mistakes. The report found that 18 to 29 year olds were three times more likely than those over 60 to report that they did not have sufficient help or guidance, and were twice as likely to admit they did not know what to do. I hear it all the time, most young people consult Google when trying to figure it out.

To meet that need, we developed a software platform that provides wealth managers, advisors, and by extension—their potential beneficiary clients—with curated task lists that guide a family through the administration work that must be completed. This gives the family peace of mind that they’re administering the estate in a manner that not only leaves no stone unturned but also complies with the laws and regulations of the local jurisdictions in which the estate needs to be settled. Technology allows advisors to seamlessly work with their clients to assign generic tasks to various family members or bring in and assign these to other professionals. Creating new tasks that relate to the unique nature of the estate, such as fine art, and setting deadlines and reminders to ensure everyone stays on track and the estate can be settled quickly are part of the platform.

Minimize the administrative burden via document automation: Winding down all of a loved one’s affairs is a long process. On average, families spend 13 months after their loved one’s death completing all the necessary tasks, or 20 months if the estate must go through the full probate process. Empathy’s report suggests families can take 420 hours in total working on financial matters, the will and probate, finding service providers, dealing with the house or other property and paying bills, debts, taxes and other estate expenses.

When taking on trust and estate administrative work, the form-filling alone is enough to make a wealth manager think twice. Document automation and management tools, however, make light work of data entry and keep the distribution process moving smoothly. With digital applications, advisors only need to enter client or beneficiary information once, and the system will pull it into letters, court forms and reports as appropriate. Innovative AI-based text extraction tools also cut down on manual data entry and eliminate the risk of human error.

Help lower estate-related professional fees: After a loved one dies, nearly every family faces a significant financial burden. Families paid $7,267 on average for a funeral, a cost which has risen 7.6% in the last 5 years, according to the National Funeral Directors Association. On top of the funeral, those who hired professionals such as accountants and lawyers, saw the average cost jump to $12,464. Among these families, lawyers’ fees cost an average of $3,910, an amount that was almost doubled for estates that went through full probate. Including all court expenses and other fees, the full probate process costs an average of $16,800. Hiring an accountant costs an average of $2,456, while real estate professionals charge $4,461 on average,

Automating documents that professionals require to get their work done will help significantly reduce professional fees. For example, one of the duties of every fiduciary administering a trust or estate is the duty to inform the beneficiaries of the account details. This involves generating a document that tells the story of how assets were managed during a specific time period. To do so, family members need to collect and submit monthly bank and brokerage statements to professionals so they can manipulate the data and get it ready so that beneficiaries can easily consume and understand the reports. A fiduciary accounting expert can be brought in much later in the process, to check that all the work was done properly, significantly reducing the number of billable hours an estate needs to pay to get this important work done.

The great wealth transfer is here. Being at the center of the estate administration process enables a wealth manager to take on the important role of coordinating different “silos” of expertise, a vital component to making sure that you stay involved in the wealth transfer process at the time beneficiaries need you the most and making asset retention more and more likely.


Ari Brojde is CEO of Estateably

Hide comments


  • Allowed HTML tags: <em> <strong> <blockquote> <br> <p>

Plain text

  • No HTML tags allowed.
  • Web page addresses and e-mail addresses turn into links automatically.
  • Lines and paragraphs break automatically.