Making estate planning matter

“Estateplanning is not a novel or new trend, but it is a niche business. We’ve been doing it for 118 years.”

The pride in Perpetual Private Clients Estates and Trusts national manager Paul Prindable’s voice is unmistakable.

“It is an important part of planning in a person’s lifetime, but in the past it has been only the trustees who realise the significance,” he says.

But this is no longer the case for estate planning, as the industry heads deeper into the 21st century and towards further development of the ‘holistic model’.

Several factors have helped push estate planning to the forefront and increased its awareness in society. Of most interest are the number of investors now entering the baby boomer phase and the beginning of the generational transfer of wealth, which is expected to continue over the next 10 years.

The greater diversity of investment products on offer has also had a direct effect on estate planning. According to Prindable, the number of people who now hold a broader range of assets and more complex investments, as opposed to traditional bank accounts and term deposits, has created demand for the service.

“People spend all their lives in the wealth accumulation phase, and it goes hand in glove that you should be planning what to do with [those assets] after your lifetime,” he says.

Fund managers are also getting involved in promoting estate planning. Last week, Perpetual Private Clients released its15 CommonEstate Planning Mistakesbrochure to its client base, highlighting such issues as failing to write a will and not taking tax into account.

Increased investor awareness and greater demand for estate planning as a financial service, has also lifted the expertise of advisers.

“There is more experience now in the financial planning industry. Planners are becoming more aware and realising they need to talk to clients about the whole bundle of planning issues,” Prindable says.

Legislation has also driven improved knowledge of estate planning among advisers, with the introduction of the Financial Services Reform Act (FSRA) and the push for greater education. The introduction of binding death nominations in 1999 also created an additional emphasis on estate planning and the need for greater information.

“The binding death nomination has made estate planning a little more complex, and people now need even more information,” Prindable says.

Estate planning offers significant opportunities for financial planners, particularly in terms of business retention and sustainability.

“The opportunity is to develop a generational contact system with clients by getting to know their beneficiaries and family, so you are working to everybody’s benefit and in an inclusive sense,” Prindable says.

This is also a business philosophy shared by Godfrey Pembroke managing director, Adrian Hondros.

“We are in the early stages of a massive shift in wealth from one generation to the next, and estate planning is a service that is going to be in increasing demand,” he says.

Hondros says it is necessary for the younger advisers coming through to avoid a shrinking business as the existing client base grows older.

“It’s financial planning for life — having a generation plan in the business — and estate planning is the mechanism to do this and is a critical part to long-term success,” he says.

The Godfrey Pembroke group also recognises the increasing demand for estate planning services and has adopted an holistic approach. However, while it is a more specialised service, Hondros says the group’s planners are not expected to be experts.

Last year, Godfrey Pembroke established a business relationship with National Australia Trustees to provide an estate planning resource service. Local representatives with legal training from National Australia Trustees’ state-wide offices are on hand to assist Godfrey Pembroke advisers with estate planning advice.

“With the holistic model, we have recognised the need to have a strong business relationship with other entities, and the adviser is at the centre of that,” Hondros says.

“We needed to have a large, long-term, national group with the resources to back us up.”

National Trustees Australia general manager Michael Tsotsos says the group’s legal representatives stand alongside the financial planners as the specialist service offering.

“The service provides estate planning managers who are accessible to the dealer groups, provide support and in-house training and also help out at seminars,” he says.