Financial planners see rise in demand
As individuals and business owners seek a greater understanding of their own finances in light of the economic volatility and questions over the state and federal tax structure, financial planners say they have seen a surge in demand.
Michael J. Helgesen, president of Sound Financial Services Inc. in Ridgefield, said that financial planners have “without question” seen an increase in business and growth overall as an industry.
At a recent gathering of a dozen financial advisers, Helgesen said the consensus was that the industry was becoming more versatile, with consultants providing more insight and services than solely asset management.
“The promise of the financial planning industry that never really materialized and had become asset management is morphing into what it was always intended to be,” Helgesen said. “We are becoming what we always said we were, which is expert financial advisers.”
Estate planning is one area of financial planning that has remained largely unaffected by the economy, said a number of people familiar with the industry.
“For the vast majority of people, I think that having an estate plan done is discretionary,” said Douglas A. Brown, principal of Brody Wilkinson P.C. in Westport. “Do I want a new couch or do I want to do an estate plan? If people are being affected negatively by the recession, they”™re not going to be leaping to focus on their estate plan.”
However, the populations of Fairfield and Westchester counties might be the exceptions to the rule, Brown said, adding that when home values reach into the millions of dollars, people often are more aware of estate-related issues.
With widespread uncertainty over the federal and state tax structures, Brown said that many of the area”™s residents should have a vested interest in knowing what the stakes are for their assets.
In New York state, the estate tax threshold kicks in when a deceased person leaves assets worth more than $1 million to anyone other than a spouse. In Connecticut, the estate tax threshold is $2 million and the federal estate tax threshold is much higher at $5 million for individuals and $10 million for families in 2011 and 2012.
“People at the top of the income level with more assets are probably more aware of how the laws may impact them,” Brown said.
Helgesen said that small-business owners are some of the biggest culprits when it comes to neglecting important estate planning issues.
“Business owners are horribly neglectful of important and critical estate planning issues,” he said. “Middle-class people only act on estate tax issues when confronted with it by a knowledgeable planner. Wealthy people generally are better advised in that regard.”
While estate planning services have not seen any noticeable increase, Brown said that there has been a marked increase in estate-related legal disputes over the past several years.
“One of the main reasons for the increase in estate litigation is that people are living longer but not maintaining their mental capacity. A lot of the wrongdoing takes place while mom is still alive but on her way down hill,” he said. “Combine those societal factors with heirs trying to make up for whatever they have lost in the recession and you have got a volatile concoction.”