PLANADVISER - May/June 2021 - 37

just what's going on in a given account but also in his
whole household's finances and everything he has held
away, across potentially many different accounts, " Honikman
says. " This expectation is reasonable. Think about
being a provider that wants to offer lifetime annuities or
an adviser who needs to provide insight about how much
of the client's assets he should annuitize. Well, understanding
your clients' household access to pension plans
and Social Security, for example, will be a critical component
to understanding their annuity needs. "
Another critical component of younger clients'
emerging expectations, thanks in part to the pandemic but
also to broader, ongoing shifts in the consumer economy,
is that more people expect simple and actionable service
some $7 trillion could be inherited by younger generations-mainly
by Generation X and Millennials, but also by
Baby Boomers-in just the next several years. Importantly,
nearly three-quarters of these investible assets are held in
taxable accounts.
Opportunities Abound
As Foy and Honikman explain, this massive pool of moving
assets presents a great opportunity for forward-thinking
advisers to grow their book of business, both by securing
new clients and by helping existing ones effectuate a
successful wealth transfer.
Despite this outlook, research suggests that advisers
... some $7 trillion could be inherited
by younger generations-mainly
by Generation X and Millennials ...-
in just the next several years.
to be provided on demand. In Honikman's view, there is
no way that advisers and wealth managers-or any professional
service provider-can ignore this fact and survive
for the long term. " As we look to the end of the pandemic
and what comes next, we're trying to be strategic and not
just tactical in terms of developing our own platform and
solutions, " Honikman says.
Some additional food for thought comes from J.D.
Power's findings on the topic of fee preferences. According
to the researcher's 2021 investor study, one-time fee-forservice
and subscription payment models appear to be
those most attractive to younger investors. Nearly threefourths
(74%) of investors under age 40 say they would
prefer to pay for full-service wealth management via a
one-time fee-for-service model. This is followed closely by
a subscription model, which is supported by 73% of investors
in that group. By contrast, among full-service investors
40 and older, just 42% support a fee-for-service model
and 34%, a subscription model.
Honikman suggests that the rapid pace of merger and
acquisition (M&A) activity occurring in various parts of
the financial services industry can be likened to an arms
race-especially in the retirement plan adviser and independent
wealth manager segments.
" The independent advisory firms themselves are almost
in a race to get bigger and to add new capabilities, " he says.
" My view is that they aren't seeking scale for scale's sake.
My view is they're seeking scale to secure better access to
the technology and staff resources that will allow them to
deliver a modern, dynamic and evolving customer experience.
The world is moving so quickly in terms of tech
requirements and the customer's expectations. "
According to the LIMRA Secure Retirement Institute,
could do more to pursue this end. Indeed, a 2019 survey
from Edward Jones showed that, among
Americans currently working with a financial
adviser, 64% reported never having
discussed estate goals and legacy plans
with that professional. Further, only 34%
of Millennials and Gen Xers had discussed
their estate/legacy goals with their financial
adviser, which increased only minimally for
Baby Boomers (38%), the generation likely to
need estate plans the soonest.
In practical reality, sources say, much of what advisers
will be able to do for their clients in terms of supporting
wealth transfers will be determined by the financial firm
they work for and its specific business model. Clearly, a firm
exclusively devoted to defined contribution (DC) retirement
plans will have fewer direct services to offer in this area and
may typically make referrals to unrelated entities.
Still, even a firm in this position must be able to speak
fluently about wealth transfers and help its clients understand
the impact of these transactions on their retirementspecific
accounts and future investment strategies. On the
other hand, practices that do both retirement plan advising
and wealth management have a more direct stake in where
taxable legacy assets may end up.
One such firm is CAPTRUST Financial Advisors, which,
in terms of serving individual clients, offers account
aggregation services, cash-flow planning, charitable gift
planning and estate/legacy planning. Though it does not
aggressively cross-sell these services to its retirement plan
clients, it does receive regular inquiries from the client
base about the provision of such services.
" When I talk to a lot of our institutionally focused peers,
they're all trying to figure out their relationship with the
wealth management space, " says Rick Shoff, managing
director of the CAPTRUST Advisor Group in Doylestown,
Pennsylvania. " We're going down the route of doing both
private wealth and retirement business because we know
that, ultimately, all the people we are helping within the
institutional plans, they're eventually going to have to do
something with that money. For that reason, we believe
that being holistic and addressing the private wealth side
is important for our future and for our clients' well-being. "
-John Manganaro
planadviser.com May-June 2021 | 37
http://www.planadviser.com
PLANADVISER - May/June 2021

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