Transferring Wealth the Right Way

Transferring Wealth the Right Way

Why Intergenerational Wealth Transfers Fail 70% of the Time

According to a study that surveyed 3,250 wealthy families, 70% of the time when wealth is transferred to an heir, it is lost due to mismanagement, poor investment choices and other mistakes.

In their book, Preparing Heirs: Five Steps to Successful Transition of Family Wealth and Values, Vic Preisser and Roy Williams cite three reasons why wealth transfers result in so many catastrophes:

  • 15% of failed wealth transfers are a result of taxes, legal issues, and poor financial planning.
  • 25% of failed wealth transfers are because of inadequately prepared heirs.
  • 60% of failed wealth transfers are because of breakdowns in communication and trust within the family.

The problem I see is that the accumulation, management and retention of wealth is a direct manifestation of mindset and action. When families only focus on hard assets – the money – they lose sight of their most important assets.

You have three asset types and only focusing on the money or tangible assets leaves a gaping hole. If you are not able to properly pass on all assets to your heirs, you end up with break downs in family communication, misunderstandings, legal problems and squandered wealth.

Assets of Excellence

When most people think of assets, they think of physical things—money, homes, cars, jewelry—but these objects are a poor replacement for a person’s most valuable assets.

Your assets can be broken into three main categories:

  • Character Assets: Your meaningful relationships, values, health, spirituality, heritage, purpose, talents, and plans for giving.
  • Intellectual Assets: Your business systems, alliances, ideas, skills, traditions, and wisdom.
  • Financial Assets: Your physical wealth and how to pass along money in a way that is meaningful and is not going to harm its recipients by making them dependent and unhappy.

It is easy to pass along your financial assets. Simply set up a trust or foundation and they are distributed as you have instructed.

But what about your character and intellectual assets?

Often these assets are lost simply because there is not a structured way to identify them and pass them along. But there is a way to properly structure and create a meaningful legacy that takes into account your intellectual and character assets and may very well be the thing that preserves your financial assets.

When you look at the stats above, you'll see that 85% of failed wealth transfers are a direct result of not properly passing on intellectual and character assets and much of the remaining 15% could be solved by transferring these two asset types as well.

What is a Meaning Legacy?

Simply put, a Meaning Legacy preserves your life, lessons you’ve learned along your journey and vision for the future as a guide to those you care about. It’s not only about leaving behind something great after you have died. It’s about living life in a way that will positively impact those you love right here, right now.

A Meaning Legacy gives your loved ones so much more than good memories; it creates a dialog, a family narrative that will serve as the foundation for their decisions, loyalty and love. When a family is able to openly discuss important issues, have fun together, learn together and support each other, everything is better—from transferring wealth to family vacations.

Laura A. Roser
Life Transitions
Twitter Email

Laura A. Roser is the #1 expert in meaning legacy planning. She is the Founder and CEO of Paragon Road, a company that assists individuals in passing on their non-financial as ... Click for full bio

An Emerging Theme In Thematic Investing

An Emerging Theme In Thematic Investing

Exchange traded funds (ETFs) are popular vehicles for market participants looking to engage in thematic investing. Thematic investing looks to take advantage of future growth trends, including disruptive technologies. Given that forward-looking approach, stock-picking in the thematic universe is equally as hard, if not harder, than in traditional market segments.

Go back to the late 1990s, before the bursting of the Internet/technology bubble. Back then, investors stood an equal chance of selecting E-Toys over Amazon or some no longer in existence networking equipment maker over Cisco.

“History is littered with examples of prospering industries with no indication of which company will come to dominate the industry,” according to Nasdaq. “This suggests that successful thematic investing is more about selecting baskets of investments rather than single securities.”1

The ALPS Disruptive Technologies ETF (DTEC) provides basket exposure to a broad swath of thematic investments. DTEC features exposure to not just one or two emerging technologies, but 10 such themes on an equal-weight basis.

Disruptive Efficiency

The 10 themes represented in DTEC are as follows: 3D printing, clean energy, cloud computing, cybersecurity, data and analytics, fintech, healthcare innovation, Internet of Things (IoT), mobile payments and robotics and artificial intelligence (AI).

Generally speaking, fund issuers have been quick to respond to disruptive and transformative technologies, bringing products to market to tap these themes. Prior to DTEC coming to market late last year, there were ETFs devoted exclusively to cloud computing, cybersecurity, robotics and other themes featured in DTEC. However, few use the basket approach to themes employed by DTEC.

Related: Getting Paid to Play The Energy Patch

February, a rough month for U.S. stocks, highlighted the advantages of DTEC's multi-theme methodology. Seven of the 10 themes found in the fund finished the month lower, but DTEC was able to outperform the S&P 500 on a monthly basis.

Focusing on individual themes can be rewarding over the long-term, but not all investors have the risk tolerance for such a strategy. Consider this: the Indxx Global Robotics & Artificial Intelligence Thematic Index jumped more than 48% in 2017. That type of performance is enough to seduce many investors, but that same benchmark slipped 7.60% in February, generating monthly volatility of 34.10%.Said another way, that robotics and AI index's February slide was more than triple the loss experienced by DTEC during the month.

More Advantages

While it probably is not accurate to call the indexes devoted to individual disruptive themes “old,” many use old school weighting methodologies. For example, the two largest components in the ISE Cloud Computing Index are Netflix, Inc. (NFLX) and Inc. (AMZN). Only two members of the S&P 500 have larger market values than Amazon while Netflix currently has a larger market cap than Wal-Mart (WMT) and McDonald's (MCD).

Holdings subject ot change as of 12/31/17

For its part, DTEC not only equally weights its 10 disruptive themes, but its 100 components as well, potentially reducing single stock risk in the process. As the chart below confirms, equally weighting stocks is rewarding across sectors and market capitalization segments.

Past performance does not guarantee future results

Annualized returns for the past 10 years show seven of the 11 S&P 500 sectors, when equally weighted, outperform cap-weighted equivalents, according to S&P. Three of those seven sectors – financial services, healthcare and technology – are prominent parts of DTEC's roster.

1 Source: Nasdaq Dec. 28, 2015

2 Source: ETF Replay data


An investor should consider the investment objectives, risks, charges and expenses carefully before investing. To obtain a prospectus which contain this and other information call 866.675.2639 or visit Read the prospectus carefully before investing.

An investment in the ALPS Disruptive Technologies ETF (DTEC) may be subject to substantially greater risk and volatility than investments in larger and more mature technology companies.

There is no assurance that the market developments and sector growth based upon the themes discussed in the article will come to pass.

ALPS Disruptive Technologies ETF shares are not individually redeemable. Investors buy and sell shares of the ALPS Disruptive Technologies ETF on a secondary market. Only market makers or “authorized participants” may trade directly with the Fund, typically in blocks of 50,000 shares.

ALPS Advisors, Inc. (AAI) has engaged IRIS Werks, LLC (IRIS) to produce analysis and commentary on ALPS-advised ETFs. IRIS currently has a compensated business relationship with AAI. AAI is not affiliated with IRIS.

The content and opinions expressed in this article are that of the author and not the views and opinions of AAI.  In addition, AAI assumes no responsibility to ensure the accuracy of the content written by the author.

There are risks involved with investing in ETFs including the loss of money. Additional information regarding the risks of this investment is available in the prospectus. Past Performance is not indicative of future results.

The fund is new and has limited operating history.

ALPS Portfolio Solutions Distributor, Inc. is the distributor for the ALPS Disruptive Technologies ETF. AAI is affiliated with ALPS Portfolio Solutions Distributor, Inc.

The author is not an investment professional and this article should not be considered investment advice. While the information and statistical data contained herein are based on sources believed to be reliable, the author takes no responsibility to ensure the accuracy of the content. Additionally, this article should not be relied on or be the basis for an investment decision. Information that is historical is not indicative of future results, and subject to change.

S&P 500®: A capitalization-weighted index of 500 stocks designed to measure performance of the broad domestic economy through changes in the aggregate market value of 500 stocks representing all major industries.

S&P SmallCap 600®: A capitalization-weighted index that measures the small-cap segment of the U.S. equity market.

S&P MidCap 400®: A capitalization-weighted index that measures the mid-cap segment of the U.S. equity market.

Indxx Global Robotics & Artifical Intelligence Thematic Index: The Indxx Global Robotics & Artificial Intelligence Thematic Index is designed to track the performance of companies listed in developed markets that are expected to benefit from the increased adoption and utilization of robotics and Artificial Intelligence ("AI"), including companies involved in Industrial Robotics and Automation, Non-Industrial Robots, Artificial Intelligence and Unmanned Vehicles.

Tom Lydon
Twitter Email

IRIS Co-Founder and Editor and proprietor of Tom is a frequent contributor to major print, radio and television media including Forbes, The Wall Street Jou ... Click for full bio