The rise of legal innovation and disruptions to the industry being propelled by non-lawyers and technology, speaks to one core thing – your clients are demanding 21st century relevance, and you should too. You now have new audience demands, the online world, the growth of digital assets, and globalization affecting the backbone of the estate planning industry. If your practice hopes to maintain its client base and grow, it will have to dance with these several changes – truly modernizing its approach.
New Audience Demands
What drives your business? Your clients of course! Your clients make up your audience, and your audience is changing.
Of Immediate Concern:
The ageing population in the United States is increasing, with those aged 65+ making up 15% of the population as of 2015. While all of the traditional needs still stand, there are some notable nuances to consider.
- The prevalence of being divorced is increasing with 3% in 1980 to 13% in 2015 for women alone.
- The rate of Alzheimer’s disease is increasing.
- More than 27% of women aged 65-74 lived alone in 2014.
These changes are creating complexities in the estate planning process. For example, with the increasing rate of Alzheimer’s, there is an increased need for individual’s to implement a plan to avoid misguided or incorrect directives.
One study indicates that Millennials have overtaken Baby boomers as the largest population segment by age. Though they’re not yet likely to be considering the planning of their estates, there’s need to understand and begin addressing them as they’ll be the future of your practice. When you consider that there’s an estimated 22.3% of the American population that is defined as “millennial” (18-34 years of age) – then the need to pay attention starts to make sense. In a recent article published through wealthmanagement.com, an attorney expresses in great detail the importance of getting this demographic on board with considering and preparing for their future in a real way.
This is a very different group of people than your traditional estate planning client. They’re probably not aware of how many assets they actually do have and what to do about protecting them or preparing them for their future family, if they have a family at all! Considering 59% of millennials are single and have never been married, and many have pets instead of kids – having dependants to worry about in the estate planning process is rare altogether. They’re driven by experiences and connections, and not investing in homes and traditional assets in the same way as previous generations. This means their assets could be less tangible and take forms like assets on social media or investments in future experiences. Your practice needs to begin building the infrastructure to address the unique needs of this population, because when they do start planning their estates – it’s going to be in mass numbers!
More Complex Family Dynamics:
Families simply are not what they used to be. According to a study conducted in 2005, the traditional household consisting of a working father, stay at home mother, and two children, accounted for less than 10% of American households. Today, we now have incredibly more complex family dynamics than just a deviation from the traditional household. We now have to consider ex-spouses, new spouses, children from other partners, families spread across continents, and even the nuances that come along with culturally blended families. Considering an estimated 50% have ended in divorce and that of married parents surveyed 21% had children with another partner it’s not difficult to see just how complex families now are.
In addition so much of family’s lives and activities are happening online. Accounts and assets like Netflix and Spotify have become household names. Family communications and relationships are increasingly more mobile and online; for example, 56% of children aged 8-12 now own cell phones and 70% of those under 12 use tablet devices. In fact, one third of recently married couples have met online, with several going on to have families.
These complexities lead to a number of intricacies that are changing the way professional planners are handling their clients’ estates, including:
- Planning that addresses non-biological children and previous spouses
- Assigning the most appropriate power of attorney
- Ensuring there aren’t hidden accounts and hidden beneficiaries to those assets
- Taxation policy differences across borders and tax avoidance preparation
Online Competition and a Demand for Education First
Like never before people search for information and answers to their questions before seeking the advice or services of professionals. The rise of “Google Dr.” is a great example of how people are turning to the internet for professional information. According to one study 80% of Internet users surf the net for health information. That’s a massive amount of Internet users then that might not be getting good information, receiving a misdiagnosis, or worse – neglecting to get a diagnosis at all. While there is little reciprocal research on how people use the internet for legal help, there’s a good chance the numbers could be similar. The use of the Internet (specifically google searches) to find a lawyer is on the rise – with one survey indicating that finding a lawyer online was the second most used method.
Furthermore there is a rise in online legal service providers that are creating highly accessible options for individuals through the internet. For example, Rocket Lawyer is an online platform that enables people to create legal documents and get the advice they need through online mechanisms. These platforms are not only giving people alternatives to more traditional practices, but are also using the provision of online education as a method of acquiring new customers.
The Growth of Digital Assets
We have addressed the growth of digital assets in two of our previous articles, one addressing how physical property is going digital and the other discussing the spread of these assets. However, it is worth addressing these concepts again in the consideration of preparing your practice for this century. The growth and spread of new types of assets like online currencies and the content on social media, has greatly transformed the way assets are addressed and managed in the estate planning process. For example:
- Changing Laws: new legislation has emerged and is continuing to evolve to address this new area of asset planning.
- New Assets: new types of assets have emerged and will continue to come into existence forcing consideration of things previously not thought of in the planning process. Everything from biometric data, to weaponry or fictional assets bought in an online gaming world are now vivid realities when it comes to planning a client’s estate.
- Hidden Assets: the average American has 130+ accounts and an estimated $37,000 stored in digital assets. That leaves a lot of room for the loss of or neglect of various assets when planning one’s future.
Global Dispersion like Never Before
The rise of technology, along with patterns of globalization has created a lot of room for both the acquiring of and displacement of assets abroad or completely online. According to NAR’s 2016 Profile of International Activity in U.S. Residential Real Estate, 16% of real estate agents who responded indicated that they had at least one client seeking purchases abroad – that was up over 50% from the 12 month period just before. Beyond the strength of the American dollar, other factors like emerging technology can be attributed to both the expansion of and strengthening of buying power. New technology like the Blockchain or the emergence of online currencies has also made the purchasing of larger assets more accessible to broader demographics.
For the same reasons it is now not uncommon for assets to be without a jurisdiction altogether. More and more assets are being purchased or stored online without any kind of tangible presence; for example the assets stored in Evernote or Dropbox accounts. Furthermore, online records of physical assets are now emerging as a method of purchasing or exchanging these assets. These changes have taken away the jurisdictional boundaries in which our assets have traditionally been held.
There are other considerations beyond the jurisdiction of assets adding to geographical planning complexities. For example, people are incredibly more mobile than they have been previously, now working in multiple jurisdictions or remotely online. Another example is the rise in having family members dispersed across continents. These changes have created several issues with the management of estates like the competing taxation laws and the differences in legislative requirements.
If we look beyond this century to the future of estate planning, it’s not tough to see that the needs of clients will continue to transform. Technology will continue to evolve creating new assets and changes that we can’t yet even imagine. The lines separating jurisdictions will continue to blur, and we’ll continue to diversify our family units and needs of emerging audiences. This much is predictable. In the preparation of meeting 21st century client demands, there is a need to prepare for immediate changes and those to come. Gone are the days of paper and pen.
Directive Communications Systems (DCS) provides resources and tools to estate planning professionals and individuals to manage digital assets; helping to keep the growth and dispersion of these assets under wraps. DCS helps you work through the estate planning process keeping you in line with the digital era.
Learn more about better managing digital assets.