Communication, trust & stewardship: the key elements of a successful wealth transfer

Coyne_Headshot-150x150John Coyne, Vice Chairman

Ask any advisor who has been at it for a while, most clients come to them having spent more time planning vacations than planning for retirement. Similarly, parents spend their working lives preparing money for the family, but don’t prepare the family for the money.

Research supports both sentiments. Forty-five percent of parents remain close-lipped on the topic of wealth, while only 4 percent of those surveyed indicated they hold regular family meetings where money is the main topic.

Whether talked about or unspoken, the next generation stands to inherit a good deal of wealth. Industry experts estimate between $30 to $41 trillion will transfer from the Baby Boom generation to Generation X and Millennials over the next 30 years. Another reality is that in the majority of instances, seven out of ten, the second generation loses the wealth it inherits. In 90 percent of families studied, the money disappears by the third generation.

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Research cited in a 2014 Forbes article set out to better understand the shirtsleeves to shirtsleeves paradigm. It found that communication and trust played a far more influential role in predicting the success of the intergenerational transfer of wealth than planning or investments. Six out of ten of those who lost their family fortune blamed their condition on a lack of communication and trust in the family. Nearly a quarter of the respondents indicated their heirs were not prepared financially to inherit the wealth. Interestingly, only 3 percent attributed the losses to poor planning and investments.

The more the next generation knows of your hopes and dreams for the assets you’ve accumulated and plan to leave behind, the better positioned they will be to conduct themselves as financial stewards. Heirs inherit assets. Financial stewards assume the responsibility of caring for the wealth to benefit the family.

Below are five ways to encourage financial stewardship among heirs:

  1. Introduce the concept of family wealth planning. Begin to explain how family values contributed to the creation of the wealth, and how financial resources helped past generations achieve individual and family goals. Emphasize the notion that in order for wealth to serve multiple generations, family members must talk openly, trust each other and act as financial stewards.
  2. Create a family mission statement. Like a corporate mission, a family mission defines the full scope of the family’s wealth, its values and why money is important.
  3. Expand decision-making powers. The education-by-inclusion approach has proven quite successful in preparing the next generation for the assets it will one day inherit. Instead of you and/or your spouse making all of the financial decisions, you could gradually involve the next generation. Philanthropy and family vacation planning are the most common places to expand the decision-making dynamic in the family. To start, you provide parameters, set a budget, and establish your voting authority, but later take a step back and let your heirs develop a plan.
  4. Conduct regular meetings. Make legacy discussions part of your family’s calendared events so you have a forum for an open dialogue about your family’s values and vision for the future. Many families plan these discussions around events intended to create a shared experience, make memories and have fun. The activity doesn’t matter. Rather, building trust, cultivating harmonious relationships, having candid discussions and creating a healthy decision-making environment matter.
  5. Introduce your advisory team. Include your financial advisor in family meetings so children and grandchildren know where to turn when the time comes. A financial advisor can help set achievable investment goals and maintain reasonable performance expectations. When an advisor monitors, tracks and communicates progress toward goals, family members can more easily refrain from acting on short-term market conditions.

For 30 years, Brinker Capital has served financial advisors and their clients by providing the highest quality investment manager due diligence, asset allocation, portfolio construction and client communication services. Brinker Capital Wealth Advisory works with business owners, individual investors and institutions with assets of at least $2 million. To learn more about the services available through Brinker Capital Wealth Advisor, click here.

The views expressed are those of Brinker Capital and are not intended as investment advice or recommendation. For informational purposes only. Brinker Capital, Inc., a Registered Investment Advisor.

 

Building the team for the business owner: Picking your first partner

Coyne_HeadshotJohn Coyne, Vice Chairman

Last week, we hosted a terrific webinar with Andrew Haas, a senior estate planning partner at Blank Rome, a major Philadelphia-based national law firm. Over 100 financial advisors throughout the country signed on to participate.

It dawned on me as I listened to Andrew that when building a team for a business owner client, financial advisors should align first with an estate planning attorney. Why? Because together, not only can you help business owners understand how their life will be after the sale of the business, advisors can help business owners recognize their own mortality.

My friend, Dan Prisciotta of Lincoln Financial, has a line in his excellent book, One Way Out, which is about helping business owners exit their business for the highest possible value. In the book, Dan says, “Your exit is 100% guaranteed whether you go out vertically or horizontally.”

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The role of the partnership is to help business owners maximize the value of their business so they can enjoy the fruits of their labor and secure their legacy after they are gone. The estate planning lawyer is the bucket of ice water that can wake the business owner up to the reality that poor preparation of the exit plan will have a direct impact on how their family and heirs will live their lives after they are gone.

An estate plan coupled with a financial plan prepared by you reflects an exciting and reasonably predictable future after exit. You have helped them take the first step in letting you build their team. The key to a great partnership is transparency. By having both the financial plan and estate plan fully understood by all parties, as these are both living documents and will evolve over time, you can keep everyone’s eyes on the target of a successful exit.

We want to help advisors help their business owner clients live the life they’ve worked for. The way to begin the process may lie with helping them understand life after they’re gone.

To help decide which estate planning attorney is appropriate, you may consider engaging in some of the services that are offered through investment management firms such as Brinker Capital that have relationships with a wide array of organizations. Brinker Capital Wealth Advisory works with business owners, individual investors and institutions with assets of at least $2 million and has partnerships with firms that can assist with the estate needs of business owners.

To learn more about Brinker Capital, a 30-year old firm following a disciplined, multi-asset class approach to building portfolios, and an overview of the services available through Wealth Advisory, click here.

Have a safe and enjoyable Independence Day weekend!

The views expressed are those of Brinker Capital and are not intended as investment advice or recommendation. For informational purposes only. Brinker Capital, Inc., a Registered Investment Advisor.

Extra! Extra! The sky isn’t falling!

Coyne_HeadshotJohn Coyne, Vice Chairman

Growing up in an extended family passionate about politics, I have been watching elections closely since 1968. It seemed that every four years if “our guy (now gal as well)” didn’t win; go get Marlon Brando and remake the movie Apocalypse Now. The world as we know it was over, the economy would collapse and…life went on.

Most importantly, let’s first remember that the fear and anger that is driving these apocalyptic visions are being created by the media’s desire to sell advertising! Now I am the first to admit that there are characteristics to this election that are different in many ways than we have seen in the past and they center on the historically high unfavorable ratings of both presidential candidates. Nevertheless, we have not become the most envied democracy in the world by accident. Regardless of the rhetoric, both parties will accept the outcome and we will have a new President of the United States and a new congress in January.  Will they be as ineffective as some believe they have been in the past? Maybe. What is for sure is that our lives will continue, people will retire, get married, divorced, change jobs, fight illness and move forward. And they will need to invest in order to deal with all the mundane components that make up our hopes, dreams and anxieties.

Our friend Dan Clifton at Strategas Research Partners has been providing us with some of the most outstanding “in the moment” political and market analysis for the past 18 months. He has been doing this with an eye towards providing us with the sectors of the economy that will be impacted by the makeup of a government whether all Democrat, all Republican, or a mix. He has deftly pointed out the potential winners and losers by sectors and asset classes and provided historical context to demonstrate that the presumed wisdom that says we do better with this party or that is never always the case and often is the exact opposite of the believers assumption. He also notes that active investment managers understand this.

Chuck Widger, Brinker Capital’s Founder and Executive Chairman, has been educating advisors and investors throughout his career on the idea that emotions can wreak havoc on a lifetime of careful planning. He uses a bucket approach to categorizing assets that you could consider adopting in light of the election results. Are your safety assets going to remain that way? Highly probable. Are your income assets going to continue to work? The Fed has more influence than the President of the United States, but much of these investments are already locked in. It is more important that you have a good manager going forward than worry who the next Speaker of the House will be. What about your accumulation bucket? Your long-term money will outlast this incoming administration and probably many beyond it. Regardless of who is elected, there will be times of turmoil and unbridled enthusiasm. The only thing that is predictable is that in the proper hands your investments will compound over time.

So put on your seatbelt and get ready for a nasty, scary ride for the next few days…but leave the portfolio alone.

The views expressed are those of Brinker Capital and are not intended as investment advice or recommendation. For informational purposes only. Holdings are subject to change. Brinker Capital, Inc., a Registered Investment Advisor.

Brinker Capital Founder and Executive Chairman Charles Widger Makes Historic $25 Million Investment in the Villanova University School of Law

Coyne_HeadshotJohn Coyne, Vice Chairman

All of us at Brinker Capital are proud to recognize the generosity of our founder and executive chairman, Chuck Widger, who has made a transformative $25 million investment in the Villanova University School of Law. In recognition, the school has been renamed the Villanova University Charles Widger School of Law.

Chuck, a 1973 Villanova School of Law grad, proudly refers to himself as a “Villanova lawyer,” and has remained involved with the school in various capacities over the years. He has played an active role in its efforts to revolutionize legal education by infusing vital business coursework and practical experience into the Villanova School of Law’s curriculum. Its tagline, “Where Law Meets Business” perfectly captures Chuck’s vision of what law schools should be doing to train tomorrow’s legal, business, government and nonprofit leaders.

Chuck_BlogChuck stated: “My investment in Villanova Law is an investment in the preservation of the two institutions that are vital to a free society, the rule of law and a market economy, both of which will enable us to flourish as a people for generations to come.”

Brinker Capital is pleased to recognize all of our Villanova alumni: Phil Green, Ping Guan, Ed Kelly, Neal McLaughlin, Jeff Raupp and Jamie Shoup.

More information about the Villanova University Charles Widger School of Law can be found at: http://www1.villanova.edu/villanova/law.html

Brinker Capital, a Registered Investment Advisor.

Addressing Diversity through Gateway to Leadership

Coyne_HeadshotJohn Coyne, Vice Chairman

“The investment advice profession has a long way to go in reflecting the diversity of America,” so says Elizabeth MacBride in her recent InvestmentNews feature, “A Diversity Problemand she’s not wrong. The financial services industry, as a whole, has too often trailed other professions in terms of diversity among the workforce; but, that’s not to say nothing is being done to address it.

At the Money Management Institute (MMI), the national association for the investment advisory solutions industry, we have cultivated a program that purposefully addresses this issue head-on.

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The Gateway to Leadership program was established in 2007 and is designed to introduce qualified minority students to the investment advisory solutions business. Through the program, we place candidates from historically black colleges and universities (HBCUs) in paid summer internships with leading financial services firms and fellow MMI members.

Brinker Capital has been entrenched from the beginning of Gateway to Leadership as our founder Chuck Widger was one of the original architects of the program. I, too, am fortunate to serve as the chairman of this program and have been able to see many participating students come through the doors at Brinker Capital over the last nine years.

While the placement of 160 students across 31 HBCUs into 34 host firms is small in context to the larger issue, we are proud of the program’s growth, success and the enthusiasm to which it has been received by its participants.

The views expressed are those of Brinker Capital and are not intended as investment advice or recommendation. For informational purposes only. Holdings are subject to change. Brinker Capital, Inc., a Registered Investment Advisor.

Brinker Capital at the FSI OneVoice 2015 Conference

Noreen D. BeamanNoreen D. Beaman, Chief Executive Officer, Brinker Capital

Brinker Capital is once again proud to be a Premier Sponsor of the Financial Services Institute (FSI) and the 2015 OneVoice conference in San Antonio, TX from January 26-28. OneVoice is the annual gathering of home office executives from independent financial services firms providing networking and education opportunities to learn about the latest within the industry.

I am honored that Brinker Capital has been selected to participate in multiple session at this year’s conference. On January 27, Brinker Capital Vice Chairman, John E. Coyne, III, will be a participant in the Using Alternatives in Investment Advisory Accounts panel; Brinker Capital Senior Investment Manager and International Strategist, Stuart P. Quint, III, will partake in the Educating Clients in the Search for Yield panel discussion, and I am personally excited to moderate the Recruiting Successes and Challenges panel discussion.

With a culture rooted in accountability, dependability and innovation, Brinker Capital has been committed to being the best strategic partner to financial advisors since 1987. This is why we feel that our partnership with firms such as FSI is so valuable and helps to make a difference in the financial advisor community.

We’re looking forward to another great conference hosted by the FSI and hope to see many of you there!

Brinker Capital, Inc., a Registered Investment Advisor

Reaching Beyond Bonds for Income

John CoyneJohn Coyne, Vice Chairman

There are many places besides bonds to generate income. Through broad diversification across and within six major asset classes, we at Brinker Capital seek solutions that will generate good yield, not necessarily high yield, for clients. We believe that you can derive income from a variety of sources so that you are better positioned to meet your investment goals and objectives.

In this audio podcast, John Coyne explains three instances where generating income may be possible:

  • Generating Income in an Absolute Return Environment
  • Generating Income in a Rising Rate Environment
  • Generating After-Tax Income

Click here to launch the audio recording.

Trust, but Verify

John CoyneJohn Coyne, Vice Chairman

I recently had the opportunity to participate in the 2014 FSI OneVoice conference in Washington, D.C. on a panel centered on issues related to both liquid and traditional alternative investments.  Our nation’s capital proved to be a great venue for the discussion as it called to mind the signature quote that Ronald Reagan used in his discussions with the Soviet Union, “Trust, but verify.”

As the former chief compliance officer here at Brinker Capital, I was impressed by the thoroughness of the due diligence process outlined by the audience of compliance gatekeepers during their discussions about the products circulating through their companies in both the liquid and illiquid space.  It was clear that while they maintain excellent relationships with their product sponsor partners (no, they do not treat them like the evil empire), they have really elevated their game, particularly in understanding the advisor/investor motivations in determining the appropriateness of a particular investment.  It is clear that many eyes are on the investment decision as it winds its way through the Broker/Dealer pipeline.

Financial Services InstituteFSI is providing the type of farsighted stewardship that recognizes that the product manufacturers, custodians, Broker/Dealer’s and the advisors must have a common communion around the needs of the client.  Events like the OneVoice conference demonstrate that their fostering and encouragement of an effective dialogue among all these parties creates the best potential for success.

Taking care of the client…the Gipper would be proud.

Brinker Capital at the Financial Services Institute OneVoice 2014 Conference

Noreen BeamanNoreen Beaman, Chief Executive Officer

In June, we announced Brinker Capital as a Premier Sponsor of the Financial Services Institute (FSI), a voice of independent financial services firms and independent financial advisors.  FSI’s mission is to ensure that all individuals have access to competent and affordable financial advice, products and services.

FSI’s OneVoice 2014 Conference kicks off next week in Washington, D.C. where Brinker Capital is proud to be a Premier Sponsor as well as a presenter.  OneVoice is FSI’s annual conference for the independent broker/dealer community to network and gain knowledge of the latest within the industry.

FSI OneVoice Conference 2014We are honored to have our Vice Chairman, John Coyne, chosen as a panelist for the Alternative Investment panel; our Vice President of Business Administration, Brendan McConnell, as a panelist to share insight on the latest technology tools to help advisors gain efficiencies; and behavioral finance expert, Dr. Daniel Crosby, as a presenter on understanding investor behavior.

This year’s conference promises to be a good one as FSI celebrates 10 years of advocacy for independent financial service advisors and firms.  We look forward to seeing many of you there!

John Coyne on Bloomberg TV

Brinker Capital Vice Chairman, John Coyne, sat down with Deirdre Bolton of Bloomberg TV to discuss the results of the 3Q13 Brinker Barometer Survey.

Click the image below to view his segment.

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Here is an infographic illustrating some of the key results from our Brinker Barometer that John discussed.