Trusts & Estates

Trusts & Estates Estate­ Planning Professionals - Concerned Yet Optimistic

Matthew McClintock and Jonathan A. Mintz | Trusts & Estates

WealthCounsel and Trusts & Estates unveiled the preliminary results of their annual electronic survey to identify trends in the industry and to probe the mindset of professional advisors regarding the impact of the economy on their clients. The results indicate that estate-planning professionals aren’t optimistic about the nation’s economy and cite partisan gridlock on Capitol Hill. Complete findings from the survey will be published in a full report in January 2012 and will be available on the WealthCounsel website at, as well as in the January issue of Trusts & Estates. But in the meantime, here’s a sneak peak at some of the findings.

Who Responded?
Of the 1,085 respondents, 87 percent were estate-planning attorneys, while the remaining professionals were comprised of certified public accountants, certified financial planners, registered reps and insurance professionals.

The post-2008 recession has caused serious concern among business-owner clients. One in five survey respondents report that many of their clients have simply gone out of business. About 40 percent of those surveyed indicate that business clients have postponed the hiring of new employees and have taken on a “bunker mentality,” waiting for an economic recovery.

Although industry leaders generally agree that estate planning is appropriate for all adults, clients are likely married and between the ages of 50 and 69. The majority of the respondents’ married clients would likely be considered middle to upper middle class, 85 percent of whom have an average net worth of less than $5 million. Twenty-three percent of married clients have an average net worth of less than $500,000, while only 15 percent had an average net worth of $5 million or more. Single clients generally have lower net worth than married clients.

Survey data further indicates that the massive baby boom population isn’t financially prepared to fund a 20-year retirement. Respondents say an average of only 29 percent of baby boomers have saved adequately for retirement. But, as reported in the October 2011 issue of Inc. Magazine, the definition of “retirement” has changed over the years. Many boomers are seeking “encore” careers or otherwise not even interested in “traditional” retirement.

The Budget Deficit and Tax Reform
Ninety-one percent of advisors believe that the budget deficit will necessitate future tax increases. Many respondents indicate that they are already working with clients to prepare for this eventuality, taking advantage of current planning opportunities before tax increases take effect.

When asked what impact Congress’ inability to pass long-term solutions for major tax and budget issues will have on clients, respondents spoke loud and clear. Eighty percent believe the nation’s economy will continue to suffer due to inaction by the federal government.

One respondent noted that, “Partisan politics is the single greatest factor in bringing down my clients’ businesses.” Another observed that, “The lack of clear tax policy direction and uncertainty is creating economic stagnation.”

On the jobs front, professional advisors support the enactment of a bipartisan jobs plan as a top priority. Seventy-one percent of respondents believe business incentives are needed to help return jobs to the United States that had been outsourced to companies overseas. Many also perceive a strong need to rebuild the domestic manufacturing base and create jobs in “clean” industries.

Real Estate
With regard to the declining real estate market, 38 percent of respondents have seen some clients express concern or even panic, as they were counting on their real estate assets to fund their retirement or long-term care needs. Thirty-five percent of respondents have some clients who have lost their homes or business properties to foreclosure. Several respondents indicate that the inability of clients to sell their homes prevents them from moving into assisted living or nursing home facilities.

When asked to what degree the lack of financial literacy on the part of American consumers contributed to the subprime mortgage crises, 73 percent state financial illiteracy played a role. However, many feel strongly that the primary causes were a combination of unethical mortgage brokers, failed government policies, absence of accountability and greed on the part of financial institutions, consumer borrowers, lenders and investors.

Business Growth
With regard to business growth for respondents, there’s reason for optimism. While clients may have shifted focus in terms of the factors motivating them to plan, the good news for professional advisors is that clients haven’t stopped planning. While 43 percent of respondents have seen revenue decline or remain the same in the past year, 89 percent expect to see their practice grow over the next five years.

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