How to Advise Clients on Unequal Distributions to Heirs

In estate planning, most people try to divide their assets equally among heirs. But there are situations in which parents choose to divide their money unequally, such as when one child has greater financial needs. Because these types of situations are potentially divisive for families, “advisers need to be the voice of reason,” says Nancy Perez, a senior portfolio manager at Boston Private Wealth LLC, on Wealth Adviser at Advisers should “help clients articulate the reasons for their choices and make sure they really understand the ramifications of their decisions,” Ms. Perez says. In addition, advisers should “make sure clients’ desires are explicitly stated in writing so there’s no room for interpretation by a court.” To prevent nasty surprises, she adds, it’s a good idea to “encourage such clients to discuss their plans with heirs early in the estate-planning process” and revisit the plan annually.


Capitalizing on value. Value stocks “may have finally emerged from their decade-long slump” writes Barron’s. “After clocking just 55% of the total return of growth stocks over the past ten years, classic value sectors energy, financials, and materials have all rebounded by at least 20% since mid-February as oil prices have recovered.” Mutual funds “oriented toward deep-value and high-volatility plays,” including energy, are well positioned, the magazine says, but only a few large-value funds have “meaningfully warmed to energy.” Among them: American Century Large Company Value and Neuberger Berman Large Cap fund.

Retirement planning for the gig economy. A growing number of people aren’t working full-time for a single employer. A recent study by two Princeton professors found that the percentage of workers earning income in what has been dubbed the “gig” economy–through alternate work arrangements like independent contracting or providing on-call services–rose from 10.1% in February 2005 to 15.8% in late 2015. So how can advisers help such workers plan for retirement? Morningstar’s director of personal finance, Christine Benz, recommends making health-care and disability insurance a priority before focusing on retirement savings. She also recommends building an emergency fund that’s “larger than the standard “three to six months’ worth of living expenses” and investing more conservatively in light of gig workers’ more-volatile income streams.


Will the fiduciary rule reduce rollovers? According to a recent survey, retirement-plan sponsors aren’t in a big hurry to retain the 401(k) accounts of former employees. Among the 200 advisers, record keepers and third-party administrators who responded to a poll conducted late last week by NAPA-Net, a website for retirement-plan advisers, 68% said that they have yet to see their plan-sponsor clients express an interest in holding onto former employees’ assets. Another 32% do see interest, although nearly half say the plan sponsors only want to hold onto large accounts.

Goldman Sachs aims to expand its bank lending. Goldman Sachs Group Inc. is seeking to partner with small brokerages and wealth-management firms to lend money to their clients, many of whom have far less wealth than the typical Goldman private-bank client, reports Reuters. The plan “is still in very early stages and may not be active until next year,” Reuters reports.  It says the firm’s goal is to reach a wider range of borrowers, “in the U.S. and possibly abroad, without having to acquire them through a merger or build relationships one by one,” as Goldman’s profits from traditional businesses, including bond trading, have slowed. In April, Goldman completed a deal to buy $17 billion worth of online deposits from GE Capital Bank.

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