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Most Advisors Aren’t to Blame for Losing Inheritances

Communication is the biggest reason for faulty wealth transfers, public pensions are in danger of running dry and AdvicePay extends its funding round to $2 million.

A tiny percentage of family fortunes, just 3 percent, are squandered due to poor wealth management, according to a white paper by BNY Mellon's Pershing on high-net-worth wealth transfers. The majority of wealth transfers, 60 percent, actually end up on the rocks because of not enough trust and communication between the old and new generation. That’s in contrast with nearly 80 percent of families believing that investment strategies, financial constraints or macro economic events are to blame for botched intergenerational wealth pass offs. “Wealth transfer tends to be a sensitive topic for many families,” says Katie Swain, director of financial solutions at the firm. “Most families are reluctant to address the topic to avoid inter-family conflicts. But putting off the inevitable is counterproductive to wealth preservation, and is, in fact, the main reason why families experience an erosion of wealth over time.” Advisors who are aware of the pitfalls of wealth transfers, such as accidental disinheritance, transactional gifting or reluctance to relinquish financial control, can provide better advice and avoid potential problems, according to the report.

Public Pension Funds in Jeopardy

Public pension funds across the United States run the risk of running dry in the case of an economic downturn, according to a new study from The Pew Charitable Trusts. The Associated Press reports that the New Jersey and Kentucky funds are especially in bad shape. In New Jersey, if the fund doesn’t bring in enough new money to cover its promised retirement costs, the state would have to make up the difference—at least $2 billion a year. Kentucky is facing an unfunded liability of $60 billion, causing Gov. Matt Bevin to sign a bill last month reducing some retirement benefits for current and future teachers. If states are forced to make up the difference between new money and contributions to retirees, that means less money for other government services, like schools, police, parks, etc. “Even after eight years of economic recovery—eight straight years of stock market gains—the public pension plans are more vulnerable than they’ve ever been to the next recession,” Pew researcher Greg Mennis said.

AdvicePay Extends Seed Funding Round

Alan Moore

AdvicePay, a payment processing company for financial advisors that could facilitate a fee-for-service model in the industry, said Monday it is extending its seed round of funding to $2 million. The company, co-founded by Alan Moore and Michael Kitces, the co-founders of XY Planning Network, closed an initial $500,000 round of funding in November. In a blog post about “misaligned” incentives of venture capital investors that caused them to turn a cold shoulder on financial technology companies focused on the wealth management industry, Kitces said the extended seed round would come directly from accredited investors who are part of the financial advisor community.


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