The advice that helps your parents build wealth likely won’t be the financial guidance to help you maximize your inheritance well into the future. Many people who receive a large inheritance find a new financial advisor who fits their current financial planning needs better.
There were probably times when your parents’ financial advisor was great for them but terrible for you. I have a gay financial planning client whose parents’ advisor is homophobic. That relationship will not likely be a good fit going forward (to say the least). I have also spoken to many women who recounted being mansplained by their parents’ male advisor. That, and many other reasons, led one successful businesswoman to find a new financial advisor when she received her inheritance.
Research suggests that 70-to-90 percent of people who inherit significant wealth immediately fire the financial advisor who worked for their parents. I have been fortunate enough to be able to work with many people who have received large inheritances and were not comfortable with the financial guidance they were receiving from their parents’ financial advisors.
While I am aware not all inheritances come from parents, I will refer to them as an example for this conversation. Many points would be similar if inheriting money from an aunt or uncle. They could also be amplified further if inheriting from a grandparent or even a great-grandparent.
Does Your Parents’ Advisor Understand You and Your Financial Needs?
The perfect financial planner doesn’t need to be at your place in life, but they need to work with people like you. If a financial planner only works with people who are already retired, will that person be able to give you the best guidance when it comes to paying for college or buying a new house?
There are many scenarios where your parents’ advisor might want you to find another advisor. That might happen when a large inheritance is split a few ways. Each beneficiary may still inherit a substantial amount but still fall below the financial advisor’s minimum client size. You never want to be the smallest client of an advisor.
Or even worse, you don’t want to be pawned off on some junior advisor who doesn’t know what they are doing. I recently spoke to someone who just found out they had been speaking with an unlicensed assistant for several years, even though they had several million dollars with their financial firm. To say to they were pissed would be an understatement.
Many financial advisors don’t have the tax planning expertise to help you minimize taxes on your inheritance.
Do You Like Your Parents’ Advisor?
There are generational differences in our country, and those differences can spill over into what you are looking for in the financial planner who is the best fit for you. I am a gay financial advisor working primarily in Los Angeles and Palm Springs. I tend to meet many people who didn’t feel comfortable coming out to their parents’ financial advisor. Some were turned away because of their being gay or lesbian. Yes, this still happens in 2022.
Will Your Parents’ Advisor Still Be Working When You Need Them?
If you are starting a new relationship with a financial planner, you want this person to be around to help you reach your financial goals and beyond. It could be a twenty, thirty or even forty-year relationship. If your parents’ advisor is 65 or 89, for that matter, do you expect them to still be working if you are in your fifties (or younger) by the time you retire?
You may think I’m kidding; plenty of financial advisors are still working well into their eighties. According to JD Power and Associates, more than 20% of financial advisors are older than 65. I am decades away from turning 65, but I could see myself working forever. I will have achieved financial freedom well before then, but I love what I do, so why stop?
Have They Been Helpful During This Difficult Time
You are a potential new client to your parents’ advisor. Hopefully, they have helped guide you through the minefield of choices you need to make about your inheritance. They should be trying to get to know you (if they don’t already work with you), which could make it much easier to keep them as your new advisor. They should have a duty to help you make intelligent choices with your inheritance. You have a responsibility to take the time to find the best source of financial guidance for you so that you can make the most of your inheritance.
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