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As it reshaped the nation’s demographics, shopping habits and popular culture, America’s most influential generation is poised to transform retirement and generational wealth.
Some 70 million aging baby boomers are poised to bequeath the greatest aggregation of assets and business interests ever accumulated, a phenomenon dubbed the “silver tsunami.” And Little Rock trust attorney Stan Miller says it’s even bigger than its name suggests.
“Over the next 25 years, between $60 trillion and $80 trillion will flow from the people who won it to the people who didn’t, for the most part,” said ILP+ partner Miller. McChain Miller Nissman. “What even sociologists haven’t understood is that this is a first in the history of humanity. There has never been a wealth transition on this scale, because once a few wealthy passed on their wealth, but there has never been such a general transition accumulation of wealth by so many people.
“When I’m feeling optimistic, that sounds pretty cool, because wealth can be transformational in terms of education, traveling and doing well,” Miller continued. “But on my scariest days, I think of a bunch of kids who might not be ready for those monies.”
Miller has seen first-hand damage, fortunes squandered on friends and bad investments, or consumed by addictions, and everyone knows lottery winners have spent millions in a few years. To avoid pitfalls, clients need to know their goals and advisors need to know their clients, wealth planners said.
“I ask clients about themselves, and I won’t look at a financial statement until I have the full story,” Miller said. “I want to know about spouse, parents, children, what kind of car you drive, where you go to church. Until I know who they are, I completely refuse to talk about money or assets.
William L. Kerst Jr. of Hot Springs and Henry Ford of Tennessee agreed, adding that more tools than ever are available to serve customer goals, as long as customers have thought deeply about what they want to achieve.
More positions, income
Baby boomers are expected to transfer $1.5 trillion to $3 trillion in assets and business value every five years by 2050, according to DD&F Consulting Group of Little Rock.
To keep up with the influx of customers, companies like Miller’s and Kerst’s Community First Trust of Hot Springs are adding employees, beefing up software and riding a growing wave of revenue.
It’s a business opportunity for advisers, but also a good time to remind the wealthy that death and taxes are indeed inevitable.
“The younger group of baby boomers, those born up to 1964, are beginning to put plans in place to transfer their wealth to their children,” said Kerst, who also heads the trust department of Farmers Bank & Trust of Magnolia. , which merged with Community First early last year. Community First remains the state’s only self-governing trust company.
“Some kids can handle the money, and you’ll see some families leave it to them, but some can’t,” Kerst said. “A lot more wealth is being placed in trusts, which translates into more wealth management and trust positions. (Kerst has 17 employees and is still going, he said.)
“We are also ensuring more money for more people, including those who let the wealth be distributed when the child reaches a certain age.”
Miller, following Kerst’s theme, said bequests “often leave some controls over the money for life, so the heirs are protected from evil influences. Wealth does have a dark side, and it can enable disruptive and addictive behavior. Keeping this in mind really guides my approach to estate planning.
Born roughly between 1946 and 1964, baby boomers left an outsized imprint on music, fashion, retail trends, and even America’s shift from farms and cities to car-dependent suburbs. .
They have also become the wealthiest generation in the country, and around 10,000 of its estimated 73 million surviving members are turning 65 every day. Many are working well into their 65s, but reflect a rapidly aging workforce; employers are expected to face a significant loss of skills and knowledge in the coming years.
“Instead of simple wills, people want a lively conversation of trust, a conversation that’s much more focused on outcomes,” Simmons said.
“People can put conditions in trusts that will require a beneficiary to go and convince the trustee that they really need the money and won’t waste it. The concept of an outright distribution is rare now.
Miller, a former Army officer who decided early on to go “deep” rather than broad, has devoted his entire practice to estate planning for more than 30 years.
He is also founder and principal of WealthCounsel LLC, a provider of document writing software, and author of “Your American Legacy,” which details his approach to estate planning.
WealthCounsel has thrived in serving the growing slice of retirees. “It just exploded, and after bringing the necessary technological solutions to the market, we have seen that our business is growing every year. There’s this aging population, this aggregation of wealth, and a growing recognition that giving a few million dollars to kids might actually be hurtful.
Kerst said First Community Trust has added employees and seen revenue grow even during the pandemic.
Success in succession
Business succession clients are also lining up. Business success doesn’t necessarily translate to succession skills, advisers said. “These people knew exactly what they wanted to do with their business, but in the end, they just pushed forward,” Miller said. “You actually need a planned succession, and you can’t do it overnight.”
Ford, who founded LifeSteps Financial in Claremont, Calif., and now practices in Tennessee, specializes in private business estates.
“On the business owner side, we’re seeing major transitions into the next generation of one-person businesses,” Ford said, offering a national perspective. “Basically, baby boomers and Gen Xers, which I am, currently own 86% of all unlisted companies, so we’re talking about a massive transfer of corporate ownership.”
In Arkansas, many of these passed on businesses are farms.
“Farmers, like other businessmen, want their businesses to continue, but they can have four children and only one of them wants to farm,” Miller said. “The others left to become doctors, nurses or whatever. So we can suggest ways to pass the farm to the child who wants it while treating other children fairly. There is no cookie-cutter approach.