* Boomers seen inheriting C$1 trillion in next 15 years
* Advisers look to insurance, trusts, beneficiaries to
* Risk of losing clients upon inheritance looms large
By Andrea Hopkins
TORONTO, April 3 The looming shift of money to
and from the baby boomers promises to be the greatest
intergenerational wealth transfer in history, and Canadian
financial advisers are looking to investment and insurance
strategies to help clients hold onto their money.
A Decima Research study found Canadian baby boomers are
expected to inherit C$1 trillion ($906 billion) from their
frugal Depression-era parents in the next 12 years, just as
their own cash-strapped offspring look to them for help to get a
start in life.
"Advisers like myself are typically working with the people
that will receive the money and be giving the money -- the
sandwich generation," said Brian Burlacoff, a certified
financial planner at Sun Life Financial in Toronto.
As in most industries, baby boomers make up the bulk of
clients in wealth management. With the front of the boomer wave
turning 68 this year and the peak in their mid-50s, the
challenge of inheriting money and planning for their own estates
is becoming a top priority for clients and advisers alike, in
part because advisers risk losing much of their own business if
their clients' heirs take their money elsewhere.
Burlacoff and other advisers are looking to a mix of
strategies, from naming beneficiaries to creating trusts to
using insurance products to guard against tax and probate costs
for their clients. No longer is a simple will the best way to
"There is a lot advisers can do way ahead of time, over the
next three, five, even 10 years, to preserve the net amount of
inheritance as much as possible," said Doce Tomic, chief
executive of Credential Financial, a wealth management firm
serving credit unions and independents.
While a will was probably the only estate planning members
of the Greatest Generation bothered with, financial advisers
said boomers can still take a few steps now to ensure their
parents' wealth is protected before death.
The most obvious is making sure there are named
beneficiaries to financial assets, which can avoid the costs and
delay of probate. Moving financial assets from an unregistered
bank account to a registered tax-sheltered account can also save
Advisers should also outline the best options for clients
who want to give money to offspring but fear running out of
money themselves in old age or losing control of the money to an
"The gifting of assets -- passing on funds to an adult child
before your death -- may become more common with the boomer
generation," said Chris Buttigieg, senior manager of wealth
planning strategy at BMO Financial Group.
"The risk is giving too much and not having enough left over
to sustain your retirement."
Insurance products are one way to go. Mortgage insurance,
which pays upon death, can ensure heirs inherit a residence
debt-free. A life insurance policy, while expensive late in
life, can guarantee an inheritance to a named beneficiary as
long as the policy-holder can keep up the premiums until death.
Trusts, which can distribute money both before and after
death, are good for bigger estates.
"A trust is something that can be used as a tool to give
capital to heirs ... but the client can still live off the
proceeds of assets inside the trust," said Mark Yip, investment
adviser at Servus Credit Union in Leduc, Alberta.
Other popular options, like naming an heir as a co-owner of
a residence, are riskier, said Ken Huggins, senior wealth
adviser at Meridian Credit Union in Pickering, Ontario, because
the home would then be vulnerable to creditors if the heir gets
into financial trouble.
Yip believes boomers will bring another change in estate
planning: the desire to give more living gifts, so that they can
see the enjoyment their money brings to heirs. He said the risk
is that they give too much too early, not appreciating how
expensive long-term care might be in old age or ill health.
"I take a very neutral stance, because it's a delicate
subject. I talk about the pros and cons and worries I have, but
at the end of the day it is their money. I do offer to sit with
their children as well, in hopes of educating them," Yip said.
From an adviser's point of view, one of the biggest risks is
the loss of business upon the death of a client. Even if an
adviser has meticulously planned the estate and managed the
assets well, the heirs often take the capital elsewhere.
"In a lot of cases it doesn't matter how good of a job
you've done, the kids may decide to go with whoever they deal
with. All you can do is focus on looking after them and make
sure the kids know you are looking after them," said Huggins.
He also dispenses with the minimum asset requirements that
some advisers might use to weed out unprofitable clients, taking
on adult children of current clients in order to build a
relationship before inheritances happen.
"A lot of practices don't function that way, but I just end
up saying, 'I'd like to deal with your kids, send them to me,'"
said Huggins. "Otherwise you risk losing people altogether."
($1 = 1.1038 Canadian Dollars)
(Reporting by Andrea Hopkins; Editing by Leslie Adler)