Preparing For Life's What Ifs: A Family Financial Conversation

Hello, my name is Kimberly Threadgill and I am a Senior Wealth Manager at Stansberry Asset Management. I'm also a Certified Financial Planner and a Certified Divorce Financial Analyst. Today's topic is going to be Preparing for Life's What Ifs, a Family Financial Conversation. So let's get started. This conversation and this topic today is primarily on the great wealth transfer. This is something that has been in the news for years and expectations of what's happening with respect to who holds the wealth now, what is comprising that wealth, and where is that going. So if you look at this particular slide, you're going to see that there is an overwhelming amount of wealth that's held with the baby boomer generation. Prior to that, the older generation still are yet to pass on and move those assets to younger generations. But Gen X and millennial are far, far behind. the baby boomer generation. And so again, that begs the question, in the next 20 years, there's going to be a shift, but in what way? And what do clients that are currently holding this wealth need to be thinking about? So let's start with the primary client that we work with. You know, oftentimes I do work with the husband. And if there is, if it's a couple, right, we have lots of single clients. or clients that are handling their wealth independently. However, with clients where there's a couple, I'm often working with the husband. And so the question begs, what if spouses don't talk enough about their finances? What do you do as an advisor? And what should be of concern to a client? So this slide is showing a bit about touching on the great wealth transfer, but specifically how it transfers to women. So when we look at this slide, it starts with 2014. So a little over 10 years ago, we're looking at how much of the wealth was controlled by men. And the majority of that was controlled by men. And that continues going through closer to closer to current years. However, you can see this increase of women controlling the wealth in the United States. And the projection showing here in 2030 is estimating that at least $30 trillion will be managed by women. So again, that does beg the question of what would be the implications of just not having these conversations together. And the primary and the primary and more often the case that I see more often than not the case is that it's the husband that's talking through a lot of the investments that I'm working with and meeting with and having those overall discussions about their wealth and their assets and various points. But if that spouse is not aware of who you're working with and if that spouse is even not caring about it and completely fine, not being a part of the conversation, if she is very limited in how she is able to look at markets and understand how they change and shift, when this transfer happens, the question becomes how do we make that a smooth transfer and how do we address any pending changes that could possibly happen if there were to be any with things changing from both spouses living to one? So looking at this slide in particular, I want to explain a little bit about why this is happening. For one, women tend to live longer. And so with older couples, when this happens, of course, then the one that is still living, if it's more often than not the wife, then certainly the management of the assets are going to fall on her. Secondly, there is wealth that will be handed down to other generations. So going back to that prior slide, there's the Gen X and the millennials as well that we're looking at. And what studies are showing is that that wealth will be handed down through the generations. So Gen X will receive a portion, but the much larger portion will go to the millennial generation. And the millennial generation currently has a record number of single women. And most of these women, younger, certainly, if they're due to inherit, would want to know or should be familiar with how to invest in understanding markets because it will help them be better investors in the long run. So going to the next slide. You know, what are our goals and how are we investing? Is it the best way to reach our goals? This is one of several questions that I would suggest couples ask each other and just to start the conversation, especially if it's not something that you talk about often. And it's more of a divide and conquer situation, which, you know, more often than not, I do find that to be the case. So here's a few questions. And it's just to give you some area of where to start and communicate with each other to get an idea of where the two of you currently are and how you think about your finances and your investments. I want to touch on the second question, talking about different values and risk, you know, tolerances to risk. I think risk tolerance is touched on a lot in our industry. And it is such a common, you know, thing that's referenced. But how do you really talk about it? How do you define it? And so one thing that might be helpful is asking a question to each other, like, okay, well, if the market, if your portfolio was to go down in value, you know, go down in value by 10%, because let's say the markets, you know, drew down to that point, what would you do? And if the, you know, one says, well, I would buy more, I would, I would add more, invest more, the other would want to jump out, that tells you the risk tolerance is very different. And so it's something to talk about, something certainly to communicate about. Also being mindful that, especially if there are two, let's say two IRAs, one with each spouse, the one with the lesser risk tolerance may need to be invested a little bit more conservatively, let's say, than the other spouse is. But it's important to have a conversation because then you understand where you're starting from. And then you're looking at your goals and how can you reach that? Obviously, if you're trying to grow your assets, there needs to be sometimes a compromise in order to do that. And so asking questions and understanding all of this is really important. Another topic that comes up is, you know, debt and expenses and thinking about how to continue to pay that. How much of a rupture would it be to your life if one of the two became mentally incapacitated? Or passed away. And so debt and expenses are something that we all deal with, some more than others. But at the end of the day, it's often relative to what your income is. And if you're in your earning years, your accumulation years, where you're accumulating by either both of you are working and there's income from two people, or primarily from one, you know, talking about some solutions, whether it's life insurance or doing a cash flow analysis to see what would happen if these expenses maintain something happens, where would we draw from in order to handle that is a helpful thing that we do at SAM along with our financial planning. So with that, the expenses that you may have and the debt that you have may not be an issue now, but it could be And even if it's not something that you don't run into, that's a surprise where one person passes away unexpectedly. Inevitably, later in life, there's often two spouses, probably both with Social Security. But when one spouse passes away, then that income stream adjusts down. With that, you're also looking at what are your other sources of income. And how will that change? Something that I see oftentimes is a pension, where somebody has worked very hard all of their career, they've retired, they've received a nice pension from whatever company they worked with. There's a survivor percentage that you have to choose, whether that survivor, i.e. typically your spouse, will receive 50% of that amount monthly or 100%. or somewhere higher or somewhere higher or lower in the range. But once that's decided, it's decided. And so being aware of, do you have any kind of survivor benefit to that that carries on? And is it a notably lower amount than, again, talking to a financial advisor, talking to your wealth manager, looking at a cash flow analysis of how that would change? And being mindful of the debt that's being carried through that time is something that will help a couple avoid any kind of issues when there is that one person still left. Other questions that we encourage you to talk about with each other is passwords for accounts. Understanding that those passwords are going to change over time. So that can be a challenge because even if you're sharing that, it can change and you're not remembering to share that with a spouse. And so this is something we are going to touch on later in this presentation. But moving forward, this last question is really primarily for larger estates, clients that have larger estates. Because there's going to have larger estates because there's going to be assets that they are looking at drawing from for their lifetime. But then there's often an area or amount of assets that are really there primarily for the next generation. And that next generation typically is going to have a longer time horizon. If it's within a trust, it's important to note the taxes and how those are paid. And that also begs looking at how you're investing and are you investing in a tax efficient manner. So very different kinds of investments for things that you plan to draw on and live off of during your lifetime versus the next generation. Again, all conversations that are helpful to share with each other. And that's a point that I think that's a point that I looked into and I found this one study I want to share because it's a little jarring actually. Again, we're talking about women in the United States. They are going to be managing more and more of the wealth in our country. And in this particular study, it shows that there's a difference of life expectancy between men and women. I think most of us are aware of women. I think most of us are aware of that. And that does attribute a bit to why there is this shift. But secondly, there's an increase in married women that are making financial decisions in the household. So that is happening across generations and in an increase as well. So what I find very concerning is that 70% according to this study of the women changed their advisors within one year of their partner passing away. And, you know, I think it's so difficult to build trust with clients and to establish that long-term relationship anyway. And so when you recognize that this is just up for grabs when one person passes simply because that spouse that's remaining doesn't really doesn't really doesn't really doesn't really doesn't really doesn't really doesn't really know you doesn't know me and doesn't know what we're doing or why we're doing that and and trying to find someone who can listen to him or her and in what's important to that person going forward. And I think that's a big part of what makes being a good advisor successful is the listening. You know, this is a material change when one person is a good advisor. And as an advisor who's worked primarily with one person and understands the importance of what what that spouse who's now passed away was trying to do is helpful in sharing that with the surviving spouse and also listening to what he or she wants to do and what's important to him or her as you're picking up from this point and saying, okay, either you've done a financial planner, you've not, but let's look at where we are and what we can do to meet those needs going forward. So what happens if you don't keep good financial records? As I mentioned before earlier in the presentation, the great wealth transfer is upon us. In the next 20 years, trillions upon trillions are going to be transferring from one generation to the next. That estimation to the next. That estimation is between $84 trillion and $129 trillion. With that said, there is no better time to be mindful of if something happens, would that anybody that is inheriting this know where to go to to pick up the ball? And oftentimes wealth is not accumulated and stored with one advisor. It's because there's different kinds of things out there. If there's a life insurance policy may not be with the same person. So there's a carrier involved there. There's different people, different contacts for all of these things that the survivor is going to need to, um, to, uh, be able to contact, um, when there's a material shift, like somebody passing away. So being mindful of how these things are changing, the conversation is changing, uh, the conversation is changing. The conversation is not just expanding to the spouses, uh, and, and having that conversation with a spouse. It's also with the next generation and expanding that conversation to, to them as well. So for, for clients that, um, know that they're going to be passing on some assets to the next generation, encouraging them prior to the time when it is crucial. And in saying, listen, listen, this is something that I think you want to, um, talk about. I have somebody that I trust. And if you're interested, I'd like you to give him or her a call and, and just allowing them to connect directly with your advisor and ask them questions. Bottom line is everybody starts somewhere and, and some people will have, uh, a larger base of knowledge, um, than others, but having a welcome environment like we do here at Sam is so important to allow clients and their family members to ask questions and gain a better understanding and feel comfortable enough to be able to come back and ask questions again and, and be given some level of guidance, um, with respect to, um, you know, how to, to, uh, invest in different areas. I have personally spoken to, uh, uh, clients, uh, clients, uh, clients, uh, about, uh, everything from, uh, purchasing vehicles to, to, uh, retirement planning. So there is quite a bit that, that we often will talk about. But, um, when we, we talk to these, uh, clients, family members, we're also asking what their goals are and, and, and, and offering specific advice for them. Uh, a lot of younger people are, really looking at how can they build their own wealth. They're not even thinking about the trust and the assets that may, they may or may not get, but how can they independently start doing that now? Um, and for those clients, especially if they're starting from ground zero, then we, we are talking about much smaller accounts. And although we've got a minimum at Sam, at minimum is 500,000, uh, in investments, we offer that household. So it allows for the next generation to be able to have accounts with us under the household. That doesn't mean that there's communication about that young person's assets with the family member. That's not what we're talking about. It's about allowing them to share the same pricing. And given the fact that there is already a client here with their assets with us, they're not having a client. And we're having to meet that minimum to obtain the same quality of advice, um, that we're offering to the primary relationship within that, that, uh, family. So with that, I will say that, um, there's a lot of conversations about trying to help, um, the wealth that's been built, been built to stay and to grow so that these generations can be better off from one next, one generation to the next generation. That comes from building confidence, confidence, confidence, confidence, and younger people. And even older people, if it is a spouse who voluntarily has just simply not been interested in this space, but there are is, as we've shown a reality of the fact that there may be a time when there's no choice around it and they will need to pay attention and care because now these assets are in the assets are in their assets are in their assets are in their hands and being, uh, with an advisor that gives them a safe space to ask questions, understanding that learning doesn't necessarily mean hearing something one time and being able to go back and go over things and share things in terms of how markets work, what their goals are, why they're invested in what they're in, and also helping them through a process which we have done, which we have done, which we have done, which we have done, which we have done, which we have done, I believe we have done, I believe we have all done, on this team, where a spouse has passed away. And being that it's a very difficult time, it's still listening to the surviving spouse and saying, when is a good time for you? When can I circle back? Because there are things to do. And whether that's helping a client reach out to a carrier for a life insurance policy, walking them through that, even being on those calls, or talking through and showing if a financial plan was done, what the cash flow projection is based on the assets and the income, understanding that this day we knew was going to come where perhaps that Social Security now is dropping down, or the pension is dropping down, but you're going to be okay, because we've already expected this is going to happen at some point. And here's where we would be, and here's where we would be drawing from for supplemental income. Understanding, too, that the tax side of things is also a change, and something that a lot of surviving clients don't think about. Going from married filing jointly to single is expensive, and things change in that space. And so being aware of these things, and so being aware of these things, and working with these things through regular calls, and establishing that trust is great. But ideally, we want to establish that trust, and at least communicate and know, have both spouses know who you're working with, so that there is some familiarity before it's a crucial time. So what if you had one place to compile all of your financial resources for your loved ones? Well, we have that. We have an option here at SAM, and it's the SAM binder. This is a binder that we're going to start to send out to all of our clients, and it's quite sizable. I'm going to try to show you what this looks like. It's going to take up this whole camera, but it's empty outside of a lot of dividers, and it covers everything from a place to have your financial plan, to statements, to contact information, things like that. It's something that we put together because we feel like this is something that has resonated with a lot of clients, that they would want and need something like this. And so we've compiled and created this given with the leadership of our CEO, and we're going to start to give these out in this year. And so for those that are listening, please reach out to your advisor at SAM and let them know that you are ready to receive yours, and we will be sending these out soon. But it is one place to add all of this information that's organized and also there for the spouse or, in some cases, the next generation. And so something that we think is very valuable and a tool that we're offering here. So lastly, I want to bring in this quote from Wayne Gretzky that's, a skate to where the puck is going to be, not where it has been. And I think that that is a very relevant quote when it comes to financial advising. We are paying attention to what happens at SAM. We have an investment team that's every day paying attention to what's going on in the markets. And that is their primary focus. Whereas our wealth management team, we are paying attention to the changes and tax laws, estate laws, and all the various components and how it applies to each of our clients. And these teams together within SAM are offering what we try to give, which is the best advice to clients today and for the future. With that said, now is a very good time. There certainly hasn't been a better time than I can think of before to have a conversation with your family, starting with your spouse, to say, here's what I've been doing, here's what I've been doing, here's why I've been doing that, and start to speak to each other about what's important for each of you. Introduce that spouse. And if your other family members are interested as well and they are heirs to some of your assets, also them, to your advisor, to your wealth manager, to have some conversations now. This is going to be a memorable time in history with $84 to $129 trillion worth of wealth being transferred in the next 20 years. And I do think that given this important time, it is a time where communication is key. And with that said, I want to let everyone listening, especially our clients, to be aware that your manager, your team here is available and ready to have those conversations and to help you as you've worked for years to acquire your wealth, preserve it, grow it, to help you do what you're trying to do and work with your family to continue that. So thank you for your time today. Thank you for any questions that you may be thinking about. I hope you have some. And if you do, please reach out to your wealth manager. And if you are not a client, you can find us on LinkedIn, also on Facebook, X. And you can always go to our website at StansberryAM. Thank you so much.