The Laurex Process: Strategy Clarification
Estate of Affairs: Planning for Future Vital Despite Fears
By Linda Obele

When Bill Peltier passes on to the great unknown, at least one thing will be certain: His heirs will have no doubt about the intentions for his estate, thanks to a detailed plan he has been creating and updating for the past 15 years.

"You never know what can happen," he said. "We always think it's going to be the other guy, but you've got to be prepared."

Peltier, 68, a retired vice president of communications for Viad Corp. who now works as a consultant, is exactly the type of individual financial services officials say are fueling a local boom in the estate planning industry.

They say a large portion of clients they see on a regular basis are wealthy semi-retired or retired individuals who have followed the sun from the East or Midwest and are looking to build a relationship with a local professional -- or team of professionals -- who can help them manage their affairs.

Investment companies, including Robert W. Baird, a division of Northwestern Insurance Co., which opened an office in Scottsdale two years ago, also are following the population migration West in order to continue client relationships started in other parts of the country or to strike up new ones with snowbirds settling here.

Peltier, who moved to Phoenix 15 years ago from Chicago with the then-Greyhound Corp., said he had a basic will in place when he met Glenn Pahnke of the Pahnke Wealth Management Group at Robert W. Baird in Scottsdale. But the plan was nothing close to the one Pahnke, a senior investment consultant, ultimately developed on his behalf.

"In Chicago, I had just a rudimentary thing," he said. "I had a lawyer do it, but he probably could have gotten it out of one of those books. We redid the whole thing. Glenn takes into account the whole picture, all your net worth, works through goals with you, where you're going, what your plans are, what your risk tolerance is. He works it hard as hell."

While industry growth figures are nearly impossible to nail down, experts such as Pahnke say the estate planning business witnessed a sharp spike following the terrorist attacks in 2001 and continued growing rapidly through the bear market of the past three years.

"There were many effects of 9/11," he said. "It affected the markets and how people view their own mortality and the world we live in. People realized they need a plan. When things are going along fine, people don't think of such things. But now, people are concerned that they need to take care of their affairs."

Pahnke said estate plans range in scope from a basic boilerplate outline that easily could be developed by a bank or credit union, to a customized document created by a team of professionals including an attorney, a CPA and a financial adviser.

The complexity of the document is dictated by the size of the estate and the number of heirs involved, among other things. However, each plan has the same end goal in common -- to enable the estate to avoid probate.

Patricia Bodner, vice president of public affairs for the Arizona Credit Union League, said credit unions also are seeing an increase in the number of members seeking estate planning assistance.

"Estate planning is important whether you have a small, medium or large estate," she said. "If you have a small estate, you're not going to go to someone who specializes in net worths of $1 million. We're here for people who need a less complicated version."

On the other end of the spectrum is Lowry Hill, a Minneapolis-based wealth management firm with an office in Scottsdale, which specializes in individuals with net worth of at least $10 million.

Michael Casey, Lowry Hill principal, said his company eyed the metro Phoenix market for about four years before deciding to open an office here in 1997.

He credits the area's relative wealth, its consistent growth and large number of Midwest transplants for attracting Lowry Hill, as well as other wealth management companies that have sprouted up here in the past several years.

"People either go to Arizona or Florida when they retire," he said. "It's no coincidence that outside of Minneapolis, Lowry Hill has offices in Scottsdale and Naples, Fla."

Casey believes several factors will continue to fuel the Valley's estate planning market, including continued population growth, the aging of the Baby Boom generation and the 2001 Tax Relief Reconciliation Act, which promises to repeal the estate gift tax by 2010.

"We're on the front end of the greatest wealth transfer in the history of the country," he said of the impact aging Baby Boomers will have on the estate planning industry. "It will carry on another 10 to 15 years, at least."

Article Provided by:

Linda Obele
The Business Journal of Phoenix
January 9, 2004