They say the only constant is change and that applies to advisory services. Trust and estate planning is not a static area of financial planning. Demographic shifts, technology adoption and changing client expectations mean the strategies that worked a decade ago may no longer cut it.
Financial advisors now find themselves in a position where they need to prioritize comprehensive and personalized advice that secures a client’s legacy and values. Aligning your skills with client needs is a dance. Those who do it will bring considerable value to a client relationship and position themselves as a lifeline of sorts. According to a March 2024 survey, seven out of ten Americans (69%) indicated that estate planning was at least “somewhat important.”
Here’s a look at the key trends shaping modern trust and estate planning and what they mean for the modern client experience and your approach.
Trend #1: The Great Wealth Transfer
The largest intergenerational wealth transfer in history is on the horizon. Cerulli Associates estimates that more than $84 trillion will pass from older generations to their heirs over the next two decades. This transition is expected to shake things up. For example, heirs may live halfway across the country, are tech-forward and often have different values regarding money and impact than their benefactors.
This gets tricky because advisors must act and think beyond simple asset allocation. You might find yourself as an intermediary, guiding family members as they tackle sensitive topics like wealth preservation, philanthropic goals and responsible stewardship.
Trend #2: The Rise of Digital Assets and Online Tools
According to a Q3 2024 Advisor Pulse Survey, 19% of advisors reported that more than half of their clients now hold digital assets. As investors gain more confidence in digital assets, this diversity challenges traditional estate planning methods. Many standard wills and trusts aren’t set up for these assets. This uncharted territory means that executors will face legal and logistical curveballs. It’s incumbent on advisors to discuss a client’s digital footprint and ensure that their estate plan reflects these assets.
Technology is also introducing a new layer of complication and simplification at the same time. Digital estate planning platforms and secure online vaults have entered the mainstream. This development means clients can organize and centralize their documents and information. While convenient, these tools aren’t the same as expert guidance. Advisors should approach them as enhancements, ways to tighten up processes and enhance client collaboration while delivering high-level strategic advice.
Trend #3: A Growing Emphasis on Flexibility and Control
Today’s clients think more in-depth about wealth transfer. Most want control and flexibility. These preferences have led to the formation of certain trust structures. For instance, Spousal Lifetime Access Trusts (SLATs) have appeal because they allow the donor to make a gift to a trust for the benefit of their spouse without having to give up full access.
Similarly, some clients prefer Directed Trusts to handle investments. In this agreement, there is a Directed Trustee in addition to the Trustor, Trustee and Beneficiary. A Directed Trust divides the responsibility for the management of the Trust between at least two people (the Directed Trustee and another designated Trustee). This structure has merit because it offers professional oversight and personalized control, two attributes that matter to many high-net worth clients.
Prepare for the Future With Docupace
Your ability to navigate these trends with ease will help clients achieve their goals while you earn their trust. However, you don’t have to go it alone. Docupace helps firms modernize financial operations through a unified platform for advisor transitions, document management, compliance and workflow automation. Click here to learn more and schedule a discovery call.
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