Wealth Management Profession is Wrestling Wills & Estates from Lawyers A Future Law Perspective

2014-07-08 17:28:00

will

While law schools stick to their knitting in teaching the tried and true trusts/estates course with an elder law course option for the more adventurous and
lawyers make polite suggestions to clients about preparing a will, a vibrant wealth management industry is marginalizing the legal profession’s role in what is an emerging upscale buyers’ market for an application of “boomer law”.

Boomers are the demographic bulge comprising 55-70 year olds that is vibrant and expecting to live active lives that do conform to the financial planning slogan of “Freedom 55”. The dream of “living the good life” is very much for real for the generation that has had the good fortune to be beneficiaries of secure jobs paying above average wages augmented with generous pensions and able to cash in on residential homes that have significantly appreciated in value. This is a cash rich cohort that is, relatively speaking, well educated and accustomed to living well. Living well is intertwined with a number of legal issues that require knowledge management expertise best provided by professionals.

Lawyers counseling and advice on boomer law to clients, frequently as part and parcel of a retirement residential home transfer, is limited to a suggestion to look at drafting a will and appointing an executor for their estate, the latter role that they are very willing to take at the standard executor fee rate. That’s the extent of the knowledge management capability they acquired in law school and commensurate with the traditional practice of law. It’s all pretty boring stuff that more often than not is paid lip service by the client who moves on, and for good reason. The bank has their ear and has caught their attention.

The major banks with their network of retail branches and associated in-house savings/investment advisories along with their trust subsidiaries are the principal depositories of boomer wealth. Anything associated with wealth has a legal dimension. They undertook what in management jargon is known as a major “re-engineering” of their boomer services. In plain English this translates into breaking down a product such as preparation of a will or probating an estate into all of its component parts and then developing a value added service package that appeals to the client.

Wills and estate management are wealth management vehicles. Wealth management is a concept that appeals to boomers looking to leverage their savings and investment into some form of active leisure. Boomers are invited by their front line bank service manager or bank investment advisor to attend a wealth management meeting. They’re presented with an attractive “Wealth Management” portfolio that contains a reader friendly series of packages on everything from guides on how to prepare a family inventory identifying who gets what family heirlooms, a will planning kit and an easy to understand introduction to estate planning. They have lawyers on staff who can draw up a will or ,if you have a preference for an external lawyer, they’ll act as intermediary and locate a lawyer who’s best suited for you and negotiate a competitive rate.

Do you have a treasured family cottage you would like passed on to the next generation of children? No problem! You can breathe easy because the wealth management group can provide you with information on how to structure a family trust that will cover equitable distribution of everything from the family cottage to a family trust of stocks and bonds that will ensure there’s sufficient funds for your grandchildren and their children to attend college and university. And their wealth management department can provide hassle free management.

Who’s to be the executor of your estate? You can nominate a family member and the wealth management team will act as an advisor. Or, if your family is scattered across the country, the wealth management team will take on that responsibility and probate the estate. If there’s a home sale required they can manage that. They have the ability to negotiate competitive rates if you need to retain outside professionals such as real estate agents. And eventual disposition of your estate to family members is no problem. The bank has wealth management representatives in easily accessible locations across the country.

You get the picture. What the legal profession is failing to get is the bigger picture of what this represents. Again, to use a management jargon term “disintermediation” is taking place. In plain English it means that lawyers are being either pushed out of contemporary estate planning or marginalized. The bank, by positioning itself as point of first call, becomes the primary service provider and major fee earner. The lawyer gets to draw up the will; maybe.

Interestingly, there is a vehicle that does enable lawyers to position themselves as full-fledged wealth management players. The Society of Trusts and Estate Practitioners (STEP)[1] was founded in the UK in 1991, as is the case with many of the new age innovative buyers market focused legal services. It’s evolved into a comprehensive non-regulated professional association of approximately 20,000 members that are a mix of lawyers, accountants and wealth management professionals. Canadian lawyers who see the light are aligning themselves with STEP. There is now a Canadian chapter.[2]

Rumors abound in the UK that STEP may apply for self-regulated legal services provider status and combine law, accounting and trust and estate management into a multi-disciplinary family of service providers. However, this may become a non- starter in the UK now that the legal and accounting regulatory authorities in that country are permitting accountants and lawyers to develop alternative business structures (ABS) that will provide for joint ownership of multi-disciplinary professional services firms and regulation of each self-regulated professional by its designated regulator. They’re now well positioned to set up national wealth management networks that can compete head on with the major banks. The North American legal profession is still well behind the curve in embracing the ABS and multi-disciplinary practice concepts core to the nurturing of the “creative class”.

Lawyers can and should be proactive players through innovative collaborations in this multi-disciplinary professional services market. Unfortunately, no Canadian or American law school has seen fit to incorporate “boomer law” into its curriculum and/or develop a “Combined 2+1 (JD/LLM) Wealth Management” Degree program, an easily accessible option in the UK with its open ended two year accelerated LLB degree and third year graduate LLM. Consequently, this becomes yet one more example of why the North American legal profession laments the decline of a sellers’ driven monopoly practice of law in wills and estates while the buyers driven wealth management legal services market thrives.


[1] www.step.org

[2] www.step.ca