Over two-thirds of financial advisors have encountered financial fraud among their elderly clients at least a few times a year, but only about 5 percent say the fraud has caused a substantial financial impact.
Instead, its the emotional toll that concerns advisors. About 37 percent of advisors surveyed by the American Institute of CPAs say financial fraud caused a significant emotional impact, while about 40 percent reported it caused a moderate impact.
Why the low rate of financial impact? It could be related to the fact that the survey was taking into account clients working with financial advisors, says Jean-Luc Bourdon, a member of the AICPAs Personal Financial Planning executive committee and co-founder of California-based BrightPath Wealth Planning.
The fact that they do have financial advisor mightve played a role, having a gatekeeper to prevent the fraud, Bourdon says.
Overall, almost half of advisors reported seeing an increase in elder fraud or abuse. And the AICPA expects that trend to continue. We started with a scary number [68 percent] and we seem to be moving toward a scarier number, Bourdon says.
The demographic seems to be indicating we will see more of it because the elderly population is growing. The fact that a lot of the fraud is related to technology would also lead us to think it will grow, Bourdon says.
According to the survey, the most common type of elder financial abuse or fraud is phone and Internet scams, followed by situations in which elderly clients are unable or unwilling to say no to relatives at the expense of their own financial security.
Individuals with $5 million or more (68 percent) were more likely to do so, compared to those with $1 million to $5 million in assets (61 percent), according to the survey, conducted by Spectrem Group for CNBC, which polled 750 millionaires.
Republicans (68 percent) were also more likely to use a financial advisor to establish an estate plan than Democrats (61 percent) or independents (58 percent).
The numbers dont surprise Mitch Drossman, national director of wealth-planning strategies for US Trust, who said the constant changes to the federal estate-tax law for nearly a decade (until it was made permanent in 2013) resulted in estate-planning fatigue.
We have had an incredible amount of uncertainty with respect to estate taxes, and every change led advisors to reach out to their clients to explain these changes and be sure their documents were up to date and reflective of those changes, he said. Clients finally said, Enough already.
The higher federal estate-tax exemption amount, which now stands at $5.43 million per person due to annual inflation adjustments, has also rendered estate planning a lesser priority for many wealthy families, said David Mendels, a certified financial planner and director of planning for Creative Financial Concepts.
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The Wealth Markets Group of Union Bank has a new chief.
Michael T. Feldman, the institutions former head of branch banking and private banking, now directs the Wealth Markets Group, which includes private wealth management, wealth planning, and trust and estate services as well as the banks brokerage subsidiary, UnionBanc Investment Services, and its asset management unit, HighMark Capital Management.
Feldman took over the group from Dennis Mooradian, who retired earlier this month, Union Bank announced in a press release. He is based in Irvine, Calif.
Feldman joined Union Bank in 2009 and held a number of senior leadership roles before heading up Unions branch banking and private banking units. Before joining Union Bank, he was a managing director of retail banking at Countrywide Bank and president and CEO of Countrywide Investment Services.
In addition, the bank elevated a long-term member of HighMarks leadership team. David B. Wines was named president and CEO of the unit, replacing Mooradian who served as CEO. He will assume his expanded role while continuing as HighMarks chief fixed income officer, Union Bank said.
Both Feldman and Wines report to Tim Wennes, West Coast president and head of Retail Banking and Wealth Markets.
We believe that these appointments underscore the depth of talent and experience within our wealth markets team, Wennes said in a statement. Under Mikes leadership and with Davids oversight of our investment advisory firm, we are very well positioned to serve as trusted financial advisors to our clients as we help them achieve their financial goals.
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Registered investment advisors operating as financial planners do more for their clients than those that just focus on asset management, but earnless.
According to recent research by Cerulli Associates, financial plannersthose 4,041 firms providing complete financial plans that include income, tax and insurance componentsdeliver more servicesto clients than the 6,961 firms that just emphasizeasset management. But because both models operateunder similar fee structures, those who actually do planning (which is more costly and time consuming) earn less for their efforts,the firm says.
Perhaps the model with the highest advisor productivity is that ofcomplete wealth management, which provides more comprehensive services including complex estate planning, charitable giving and business planning largely for high net worth clients. The 2,861firms that fall into this category, on average, have about $295.4 million in assets under management per practice.
Cerulli reports the difference between financial planners and wealth managers really comes down to being more selective about client segmentation and offering higher levels of service to richer clients.
The segmentation strategy for an advisor practice lays the foundation for its service model and pricing structure, and these intertwined decisions have significant ramifications for a practices productivity and profit output, says Kenton Shirk, associate director at Cerulli. Segmentation is at the heart of an advisors growth, productivity, and ultimate profitability.
Additionally, Cerullifound that the larger the practice, thegreater the likelihood of serving high-net-worth clients. Half of practices with more than $500 million in assets focus on clients with more than $2 million in assets. Comparatively, only about 36 percent of practices with $250 million to $500 million in assets focus on these HNW clients,only 17 percent of practices in the $100 to $250 million asset range and only about 4 percent of practices with less than $100 million under management focus on HNW clients.