Advisors Without Estate Planning Could Let ‘Money Walk Out the Door’

Advisors who don’t offer estate planning may find themselves written out of the will. 

Many independent advisors are lagging when it comes to their estate planning offerings, according to a recent report from consulting and research firm The Oasis Group. The findings highlight the ongoing shift away from the traditional, document- and attorney-driven estate planning process to one led by the advisor. The ongoing Great Wealth Transfer has also upped the ante with thousands of Gen Xers and millennials inheriting wealth. There’s a huge risk in losing those clients, said John O’Connell, founder and CEO of The Oasis Group.

“There’s still $68 trillion that’s going to move, and that’s going to move primarily via someone dying and a will,” he said. “Many of the firms out there, if they don’t have the capability they need … they’re going to [watch] that money walk out the door.”

Estate of Play

There are a wide range of estate planning products out there that can digitize trust documents and create what-if scenarios based on them. Some of the best platforms are also able to navigate complex circumstances, such as clients who want to skip a generation when delineating heirs, according to the research. But if a firm doesn’t have the capacity to dramatically expand its estate planning services, it can also begin offering a more specialized capability, charging on a per-plan basis. “The first thing you should consider is, ‘What model do I want?’” O’Connell said, adding that some advisors only do a handful a year.

According to a recent report from Business Research Insights, demand is growing:

• The global estate planning services market is estimated to grow from its current $114 billion to $171 billion by 2035.
• In the US, 55% of the population has an estate plan, but the proportion rises to 67% for high-income households.

Est(AI)te Plan. Firms can also begin to train their advisors on estate planning by launching internal tools, which the $58 billion firm Carson Group recently did. Platforms incorporating AI are also gaining momentum, with the AI-powered estate planning firm Wealth.com raising $65 million in a Series B funding round last month. Other popular choices were Luminary and Vanilla, according to the research. But some types of AI can be risky, O’Connell said, especially if clients prompt the new tools for advice.

“We’re at this really interesting crossroads, where clients are not going to be coming to [advisors] for all the answers anymore,” he said. “They’re going to be doing more research on their own, and as much as an advisor can get ahead of that, the better.”