PIMCO Education

Family Wealth Planning: Steps to Success

Clients focused less on capital accumulation and more on legacy need their advisors’ help to make the transition. John Nersesian, head of advisor education, provides insights into how to have conversations with clients, plan successful family meetings and more.

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Text on screen: PIMCO

Text on screen: FULL PAGE TITLE GRAPHIC: PIMCO EDUCATION, Family Wealth Planning: Steps to Success, with John Nersesian, (5 minutes)

Nersesian: Thank you for joining us today to discuss what we think is a very relevant topic, family wealth planning.

Text on screen: John Nersesian, HEAD OF ADVISOR EDUCATION

Now, I realize it that as financial advisors, our primary focus is on helping our clients build, accumulate and grow capital for eventual purposes, whether it's retirement, college funding or other specific goals, but at some point, in our client's lives, maybe as they achieve a certain level of financial success, maybe at a certain stage or age in their lives, the focus begins to shift. It becomes less about capital accumulation and more about legacy.

What purpose will my wealth accomplish in this world for myself or for those that I care about?

Text on screen: QUOTATION: “The perfect amount to leave your kids is enough money so that they would feel they could do anything, but not so much they could do nothing.”

Image on screen: An icon is centered above the quote, showing a quotation mark.

I love this quote from Warren Buffett, as it's a question that is often asked by clients to their financial advisors. John, I'm preparing my work and my wills, how much money should I think about leaving my children?

On the one hand, as parents, we want to enable our children to accomplish anything in this world that motivates them,

B-Roll – Young people working; Text on screen: U.S. Outlook, No sign of overheating

but we don't want to undermine their motivations by leaving them with so much resources and the potential accomplishments that they can achieve in this world.

Clients want their advisor's assistance in this endeavor. After all, for many parents, they've never pursued this particular activity and they want to take advantage of the knowledge and the competency of their financial advisors.

Text on screen: TITLE – Wealthy families and goals regarding their children

Image on screen: The diagram highlights three statistics from a survey of wealthy families regarding their children. The survey results are arranged side-by-side, with percentage totals in large type above text describing the attribute. The first statistic, on the left, notes that 79% of respondents feel it is important for their children and grandchildren to meet their advisor. Next, in the center of the slide, is a statistic that states 78% of respondents feel it is important that their financial advisor have programs to educate their children and grandchildren on wealth. On the right, the graphic notes that 72% of families are concerned about the next generation being wasteful with money they pass on.

79% of clients feel that it's important for their financial advisor to meet their children as a way of establishing a relationship that may bear fruit down the road.

78% felt that it was important for their financial advisor to educate their children, to provide if you will that financial literacy or competency that will enable them to inherit and to manage wealth at a later stage in lives and then 72% of our clients feel that it's important to prepare our children, so that they don't wind up wasting the resources that they eventually acquire.

This opportunity is significant. Look at the data before us,

Text on screen: TITLE –The great transfer of wealth

Image on screen: A bar chart shows the annual percent of wealth transfer by source generation, from 2021 to 2045. Above the chart, it’s noted that more than $53 trillion will transfer from baby boomer households in the next 25 years, representing 63% of all wealth transfers. Baby boomer households will pass on more than $3 trillion annually to heirs and charities by the late 2030s. The bar chart shows that from 2021 to 2023, the so-called Silent Generation — those  those 75 or older — are the biggest source of wealth transfers, according to a 2022 study by Cerulli Associates. After that, baby boomers, those 56 to 74, are projected to become the biggest source, starting in 2024. They remain the dominant source of wealth transfer through 2045. The Silent Generation’s contribution diminishes over time, overtaken by millennials around 2037.

over $53 billion of wealth will be transferred by the baby boomer generation to that next generation over the next 25 years, suggesting a significant opportunity not only for parents to have a positive impact on the lives of their children, but for advisors to capture this money in motion.

We recognize that it's difficult to pass on wealth inter-generationally.

Text on screen: TITLE – The challenge for wealthy families

Image on screen: An illustration of money bags is used to show the destruction of wealth as it passes from generation to generation. The money bags are arranged as a vertical column of three money bags, with the largest one at the top, and becoming smaller down to the next generation. The third bag, or generation, points to for smaller money bags below it, arranged in a row, symbolizing the spreading of wealth among multiple heirs.

You've probably heard the terminology shirt sleeves to shirt sleeves in three generations and how what seems to be an insurmountable source of wealth can be destroyed rather quickly through a variety of different friction points, whether it would be taxes, inflation or the eventual division of a corpus of wealth.

Text on screen: TITLE – The challenge for wealthy families; SUBTITLE- The natural destruction of wealth: Identify values and characteristics to pass on to children

Image on screen: A bar chart shows the most important values and characteristics families wish to pass on to future generations. The bars on the chart are arranged horizontally, extending leftward from the Y-axis, starting with the most cited value or characteristic, then moving downward to less cited characteristics. Values and life lessons top the chart, with 74% of adults age 45 and older saying it is the most important characteristic to pass on to children. Next, 47% said instructions and wishes to be fulfilled is the most important thing to pass on to future generations. Moving downward, 43% of respondents cited personal possessions of emotional value, and 32% said it was financial assets or real estate.

These are the challenges that many wealthy families face.

Not only passing on their money, but passing on more than just capital, making sure that our children embrace if you will the values that are most important to us, passing on life lessons, making sure that our children accept the responsibilities they have not just as individuals, but as members of society at large.

We have a couple of ideas in terms of how financial advisors can assist their families in this endeavor.

Text on screen: TITLE – Introducing family wealth education; SUBTITLE- Path to success

Image on screen: A diagram highlights five elements as part of the path to success for family wealth education. The elements are arranged as a list, with icons serving as bullets. The first point, next to an icon of an award, is to educate yourself as the advisor. The next point, next to an icon of a light bulb, notes introducing the family wealth education concept with clients. The third item, using an icon of a document, involves identifying target clients through discovery. Fourth on the list, next to an icon of a pencil and paper, is the notion of educating the parents to gain commitment. The fifth element, next to an icon of a document with a checkmark, involves developing and implementing a program.

Number one is to educate yourself as a financial advisor about the opportunity to bring family education to your clients, number two, introduce this concept to your clients to see where it resonates or where there may not necessarily be interest.

Third, we want you to identify specific targeted clients through the process of client discovery, determining whether or not this is an important goal or objective for our clients at this moment in their lives, the fourth step in the process is to gain commitment and the willingness to participate from the parents in this equation and then finally is to develop and to implement a family wealth education program.

Now, let's be realistic not every family member is going to bring the same set of expectations and the same set of goals to a family discussion, but what I think is important to discuss are not those differences that divide us,

but the commonalities that we share as a single entity, as a family in terms of who we are, how our family defines us and the contribution that we want to make to society at large.

Text on screen: TITLE – Hold a family meeting; SUBTITLE- Family meetings – keys to success

Image on screen: The slide includes a bulleted list of questions to understand money attitudes as part of family wealth education. The questions include: How do you define success? What were the key factors attributed to your success? How did you learn about money? What were the key money messages you learned growing up? What does money mean to you? Tell me about your background and any significant events. What does “a financially responsible child” mean to you? What money messages have you passed on to your children? What are your expectations for the money you give your children? How do your children view your success? What impact has your wealth had on your children? What concerns do you have about your children? Who else is a primary influence on your child and what is their attitude about money? What ideas do you have to help prepare your children? How would you like to engage in this effort?

We encourage all of you to reach out to your PIMCO account manager or to visit our site at pimco.com to learn more about this very important activity. Thank you for joining us today.

Text on screen: pimco.com/advisoreducation

Text on screen: PIMCO

PIMCO provides services only to qualified institutions and investors. This is not an offer to any person in any jurisdiction where unlawful or unauthorized.


All investments contain risk and may lose value.

PIMCO does not provide legal or tax advice. Please consult your tax and/or legal counsel for specific tax or legal questions and concerns. The discussion herein is general in nature and is provided for informational purposes only. There is no guarantee as to its accuracy or completeness.  Any tax statements contained herein are not intended or written to be used, and cannot be relied upon or used for the purpose of avoiding penalties imposed by the Internal Revenue Service or state and local tax authorities. Individuals should consult their own legal and tax counsel as to matters discussed herein and before entering into any estate planning, trust, investment, retirement, or insurance arrangement. 

There is no guarantee that these investment strategies will work under all market conditions or are appropriate for all investors and each investor should evaluate their ability to invest long-term, especially during periods of downturn in the market.

PIMCO as a general matter provides services to qualified institutions, financial intermediaries and institutional investors. Individual investors should contact their own financial professional to determine the most appropriate investment options for their financial situation. This material contains the opinions of the manager and such opinions are subject to change without notice. This material has been distributed for informational purposes only and should not be considered as investment advice or a recommendation of any particular security, strategy or investment product. Information contained herein has been obtained from sources believed to be reliable, but not guaranteed. No part of this material may be reproduced in any form, or referred to in any other publication, without express written permission. PIMCO is a trademark of Allianz Asset Management of America LLC in the United States and throughout the world. ©2023, PIMCO.

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