Matt Hale (left) and Leah Mallett

Financial advisers won’t automatically benefit from a looming intergenerational transfer of almost $5 trillion of wealth, they need a clear plan and a deliberate strategy to engage with existing clients and their children, a webinar has heard.

Advisers shouldn’t take the opportunity for granted, and just because estate planning makes sense to an adviser as an issue to raise with a client, or is an attractive expansion of an adviser’s services, clients are not always receptive to such a conversation first-up.

But it’s a service that advisers should consider, and themselves plan for. Vanguard national sales manager for financial adviser services Matt Willis said baby boomers who hold $4.9 trillion in assets are “nearing the crest of their retirement wave and are beginning to make a monumental move from accumulation to de-accumulation”.

Matt Willis

“How this wealth gets passed on could be the biggest financial change in Australia’s history,” Willis said, speaking on a webinar hosted by Vanguard on Wednesday.

“It could also be the biggest opportunity advice that has ever existed.”

Financial Point founder Nathan Harris said that even if estate planning isn’t an immediate priority for a client, it pays to put the issue on the agenda and raise it with them in future meetings.

“Trying to address estate planning in detail initially hasn’t worked for me,” Hale said. He said it’s better to “address the client’s initial need, why they’ve come to see you in the first place and then position estate planning as a step after that”.

“[It’s] very, very important, estate planning, absolutely.

“You discuss it, you explain it, you build the building blocks, tell the stories, highlight the need. However, I found, again through experience, [it’s best to] build it as a post-implement-implementation step, and we position it as part of our ongoing service proposition.”

Rising Tide senior financial planner Matt Hale said dealing with clients on intergenerational wealth transfer and estate planning has taught him to not expect things will succeed just because they make sense on paper.

“One specific thing that hasn’t worked for us is looking at things logically,” he said.

“For example, seeing an opportunity on paper for your client base or individual clients doesn’t necessarily mean that it’s going to play out that way.

“You really need to think about why you’re doing it. What is the purpose and… is the reason you’re going into this, or broadening your advice offering, to protect your clients? Is it to get new clients? Is it to remove other financial professionals out of their life? Be really clear why you’re doing it, and then be patient.”

Hale said advisers shouldn’t think they need to be the experts in all aspects of estate planning.

“It’s something that a lot of advice businesses need to do work on,” he said.

“The first place to start is to realise or work on what specialists you need to have as a part of your arsenal.”

Hale said they see themselves as “the builder” who has trades around them to help for their clients.

“That also means that we don’t need to be the expert in every area for our clients,” Hale said.

“We work really closely with a panel of estate planners. We’re even now broadened into higher level conversations with aged care professionals so that our clients can get some peace of mind about what’s going to happen with their parents, because they’re not thinking about it until it’s happened.”

Hale said he’s learned the hard way about establishing referral relationships with estate planning experts.

“We’re a 100 per cent online business, so for us to have an estate planner that only deals with people face to face doesn’t match well,” Hale said.

“Be slow to get into bed together. Don’t be afraid of a JV [joint venture] referral relationship. We’ve learned the hard way that because it all looks good on paper, theoretically it should work [but] it doesn’t. We exited, or consciously uncoupled from, an accounting business that we had internally. That was a really hard decision.

“But it’s led to a great panel of accountants that we now work with that we really trust and provide a great outcome for our clients.”

Harris said referral relationships aren’t always a two-way street, so the motivation for establishing them should be what’s best for the client, not what’s best for the adviser’s business.

“When you’re dealing with other professionals, whether it be a family lawyer or an estate planning lawyer, don’t expect referrals back,” Harris said.

“It might sound silly, and it’s probably counterintuitive, but if you take the mentality of you do it [and] you’re addressing those [client] needs simply because it’s the right thing to do with your clients, it will happen automatically.

“If you go into it with the right mindset, and you engage with a partner that also has that mindset of putting their clients first, you’ll find that you will get the referrals back down the track, and they will be better.”

Harris said advisers should expect solicitors to have a more transactional view of the relationship.

“They’ll do a will, or they’ll address a family law issue, and they don’t feel threatened by us as professionals, they don’t feel threatened by our relationship,” Harris said.

“I used to be part of a financial planning and accounting business and I much prefer dealing with solicitors just simply on that, because they’re not threatened by our relationships with our clients.”

Harris said that when dealing with intergenerational wealth issues it’s really important to “[take] the time to understand each family’s dynamics, their relationships”.

“We’re seeing a lot more blended families today, which again, creates complexities,” he said.

“Also, families where there is a black sheep, a child or family member and a child who may have issues. Obviously, the [in laws] that come into the family, like, you know, sons and daughters in law, creating issues.”

Harris says he creates a call-to-action for clients by listening closely and providing them with examples of what can go wrong if a wealth transfer plan isn’t executed carefully.

“We do that by relating to real life experiences or examples,” he says.

“We’ve also invested a lot of time in self education, and making sure that I’ve got resources around me, such as if I identify issues, how are we going to communicate these to our clients? We use an estate planning briefing document, which is not advice, but it highlights the issues that have arisen and it’s a document that can be taken to the client’s solicitor or, obviously, our solicitor.”

Harris said getting all the estate planning and intergenerational wealth transfer issues on the table is crucial before referring the client to a solicitor or other partner.

“Information doesn’t come out easily when you’re sitting with a client with a lawyer,” he said.

“Lawyers or solicitors are really good at drafting documents but because of the transactional nature, particularly of wills, for example, they’re probably not great in or making clients feel comfortable in expressing those concerns.”

Hale said Rising Tide has also “worked hard on our ideal client profiles and we’ve become more vocal around who we deal with well, and also who we don’t deal with”.

“It’s a little bit like the advice process where if you’re scoping and scope out, it’s really simple to get the right strategies,” he said.

“You’ll notice that our collateral, our website, our Google reviews, talk to the people that we want to deal with, and they really specifically don’t talk to the people who we don’t want to deal with.

“The clients that we really consistently deal with are between the age of 31 and 54. At this stage, 91 per cent of our fee-paying clients are in that bracket. It means we have quite a homogenous client base, which allows our marketing our advice philosophies and our language to be really homogenous too.”

Vanguard practice development manager Leah Mallett said it makes good sense for advisers implementing estate planning or intergenerational wealth transfer strategies to “nurture those relationships with the older generation, that is, pre-retiree [and] retiree clients, you can add so much value helping them retire on their terms”.

“But also, ask some of the tough questions,” Mallett said.

“There’s nothing more emotional than money, so really getting deep, not just asking them about the family and who else is in the family, but [also] what could go wrong. What are you worried about? Is there anyone in the family that you concerned about when it comes to them starting to think about building wealth and that transfer piece?

“Creating and implementing the new offers to being really deliberate with those new offers to the younger gen [is] going to be key with the with the marketing efforts and doing the homework to understand what they’re wanting.”

Mallett said the advice for advisers is to build wealth transfer conversations into “whatever parts of your client engagement that works for you”.

“Whether that’s upfront as part of seeing a new client; when you’re presenting back advice when you’re having those review and planning meetings; or talking to them on the phone for those ad-hoc, check-in, how-you-going calls, bring it to life through the advice process with all that you do,” she said.