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Who's Minding My Money: How to Choose a Financial Advisor When You Inherit

How to Choose a Financial Advisor When You Inherit

As we enter the era of the largest transfer of wealth in recorded history, adult children and grandchildren may soon face the prospect of receiving inheritances that may surpass their wildest expectations.

According to figures reported by the consulting firm Accenture, currently over $12 trillion is being "shifted" from individuals born in the 1920s and '30s to the baby boomer generation (people born between 1946 and 1964). And, in the next 30 to 40 years, these baby boomers will pass along another $30 trillion to their heirs.

If you're one of these heirs, managing your inheritance will require investment knowledge and experience you may not have, and that may be beyond the scope of your current banker or investment professional.

In fact, managing a significant inheritance may require the expertise of several individuals — but where do you begin the financial advisor selection process, and what should you look for?

Here are a few things to consider.

Should You Keep Your Parents' (or Grandparents') Advisor?

One benefit of keeping your parents' or grandparents' financial advisor when you inherit is that he or she is familiar with the investments. Perhaps they've known your family member for many years, and maybe you've previously met this individual when accompanying your relative to their meetings.

Yet some may view this as a negative situation. You may feel the current advisor exhibits some complacency or unwillingness to make changes to the portfolio, even if your financial goals and situation are very different from your relatives'. Or perhaps this individual isn't a "good fit" for you in terms of personality.

Or maybe you're unhappy with the way your parents' financial advisor managed the portfolio, or the advisor may have an investment style that doesn't align with what's important to you, such as exploring impact investing options.

Using Your Own Banker or Financial Advisor

Receiving an inheritance can be an emotional time, as you manage your grief and deal with the logistics of wrapping up the financial and other aspects of a loved one's life. It's natural to turn to your own banker or financial advisor at this time. After all, you already have a relationship with them, and they understand your current financial situation. Asking them to manage your inheritance also is convenient, because you won't need to find and build a new relationship with a new advisor during this difficult time.

However, there may also be a downside to sticking with what you know. First, your own financial advisor may not have experience dealing with investments over a certain dollar value. They also may not have access to the wider range of investments that your inheritance could benefit from.

Finally, depending on their role and the financial institution they're associated with, they may not have experience in working with a team of other financial professionals that could come with a private client relationship manager who connects you to a legal professional, tax professional, and accounting professional.

Finding a New Financial Advisor to Manage Your Inheritance

If you're considering working with a new financial advisor to assist you with the more complex financial needs that accompany a large inheritance, think carefully about what's important to you in terms of what best suits your life and finances.

A private client services relationship manager — offering a full suite of financial management assistance, including banking services, credit expertise, and access to investment and financial planning services — could greatly simplify your new financial life.

Four Questions to Ask When Selecting an Advisor

Whether you're content with your current financial professional, your benefactor's advisor, or you're considering an entirely new financial advisor, ask yourself these questions before making a final decision about who'll manage your inheritance.

1. Am I comfortable communicating with this individual?

Your advisor should answer all of your questions respectfully without being condescending. You should feel comfortable, be confident in their abilities to answer your questions in terms you understand, and, most of all, you should trust them.

2. Are they easily accessible with a convenient location?

Consider how quickly your advisor responds to your phone calls or emails. Also find out if they have an assistant to help you when they're unavailable.

3. What financial credentials and education have they obtained?

4. How experienced are they?

While their team may include junior members, you may feel better about having an experienced financial professional overseeing the individuals managing your inheritance.

Take some time to make a good decision when choosing a financial advisor to help manage your inheritance. The selection you make today — and the expertise they provide to support your financial decision-making — could affect both your life and the financial legacy you'll leave for future generations.