Spokane Journal of Business

The Great Wealth Transfer to slam financial advisers

Some say industry could struggle with influx of work in coming years

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There might not be enough advisers to handle the “great wealth transfer” anticipated to occur as baby boomers pass away and leave assets to their heirs, some in the Spokane-area financial planning industry say. 

Some $68 trillion is expected to be transferred from baby boomers -- the generation born between 1944 and 1964 -- to younger generations during the next 25 years, according to a 2018 study by Boston-based research and consulting firm Cerulli Associates.

But with so much wealth set to change hands in a relatively short period of time, some say the financial planning industry is at risk of being overwhelmed with work.

Kyle Weir, senior vice president and financial adviser with the Spokane office of RBC Wealth Management, says he’s noticed a lack of financial planners in their 20s and 30s.

“There aren’t a lot of universities that actually have a dedicated financial planning program,” Weir says. “I would like to see more of an emphasis on trying to bring younger advisers into the business, whether that be through certified financial planning programs through universities, or just more education in financial planning, even at the high school level.”

Sarah Carlson, private wealth planner and founder of Spokane-based Fulcrum Financial Group LLC, says the advent of online planning resources has been detrimental to the industry by decreasing demand for services.

“People seem to think they can Google something and figure it out themselves,” Carlson says. “I don’t know about you, but I wouldn’t want to perform surgery on myself. I’d rather get someone who has some expertise and some experience in doing that.”

Weir says online resources also can create more problems for people who try to plan alone.

“You can do all that boilerplate stuff online, but the devil is in the details,” Weir says. “That’s where having humans who have the experience and the knowledge can really help. There’s a lot you can do wrong trying to do it yourself. And unfortunately, doing it wrong can get very expensive.”

Carlson says the addition of regulations since she entered the industry more than 25 years ago has also made business harder for young planners.

“When I started in the industry, before the internet, we used the phone and in-person connections to build relationships,” Carlson says.

However, the Federal Trade Commission since has implemented an opt-in do-not-call list that prevents solicitation of phone numbers on the list. 

“If people ask to be put on a ‘do not call list,’ we are not allowed to call them,” Carlson says. “It is the adviser’s responsibility to check if a person is on that list or not before picking up the phone. In addition, personal phone numbers are no longer easily found. As a result, most advisors no longer use the phone to build a new connection.”

Weir says the lack of younger planners could also be attributed to how people enter the industry. 

“With our company, it’s a two-year training program, but after that, you’re on your own,” Weir says. “It’s hard to start out in the market these days when so much information is available (to clients) online. Some (trainees) see how hard it is, and they choose to go elsewhere.”

As for planners currently in the industry, Weir says doing some legwork now could help alleviate the pressure the great wealth transfer could create. Most important, Weir contends, is to ensure clients are aware of proper planning steps now, and to try to get as much planning done with clients beforehand as possible.

“From a planner’s point of view, this is when you really want to be able to have that open line of communication,” Weir says. “Your (baby boomer) clients need to know that if you haven’t spoken to your children about what to do, now is the time to do it.”

Weir says that many clients feel awkward about discussing their finances and legal documents with their beneficiaries, but it’s the best way to prepare for a smooth transition of wealth.

“These are the kinds of conversations you’ve got to have while everybody is still competent,” Weir says.

Encouraging clients to communicate with their beneficiaries also can prevent future confusion, he says. The more that beneficiaries know about where to find documents and information, the better.

“You could have all the estate planning documents, but if they’re sitting in a drawer gathering dust and nobody knows where they are when they need them, what good are they?” he says.

Weir recalls one case in which a father left a letter to an adult daughter that included login information for accounts.

“She was able to get into them and find everything -- it went so smoothly,” Weir says. “In a world where everything is going paperless, if you don’t have a paper trail, then you’re stuck trying to figure things out online, and that be a pain in the backside.”

While digital tech might cause some issues for clients, Carlson says technology could help planners to handle their workloads more efficiently.

“I’m managing so much more than I could have managed 20 years ago,” Carlson says. “Computers really help me with getting information out, and they help me with alerts, so when something goes out of whack, it can help me be a better, more efficient professional.”

For example, Carlson says programs that automate transferring a client’s required minimum distributions from their retirement account to their selected charities have taken those tasks off her plate.

Another benefit planners can reap from modern technology, Carlson says, is the ability to work remotely.

“You could live here in Spokane, Washington, and compete with Wall Street,” Carlson says. “You don’t have to be in the heat of it and shaking hands at the end of the day to make a deal.”

Virginia Thomas
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Reporter Virginia Thomas has worked at the Journal since 2017 and covers the banking and finance industries. As a reporter, she loves learning about Spokane's many growing industries. She enjoys travelling with her husband, snuggling with her cats, and cross stitching.

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