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The state of estate effectiveness

The state of estate effectiveness

November 2020

Earlier this year, a young woman—let’s call her Anne—lost her father to illness. Her mother is the executor of his estate and made an appointment with his financial institution to settle his accounts. Anne, who is more financially literate than her mom, came along. She was not impressed with the service they received—or in this case, did not receive. The financial services representative did not offer Anne’s mother advice or solutions, or even much sympathy. Anne’s mother has accounts at another financial institution where she is well treated, so she moved her late husband’s deposits there. As Anne said to Concentra, “People have been dying since there were people. You’d think financial institutions would have figured this out by now.”

Settling affairs for the executors and beneficiaries of deceased members is an important task. It not only requires empathy, compassion, and understanding, but also requires effective, timely execution. The Estate Effectiveness Survey is a new study from Concentra Trust to benchmark credit union estate processes and better understand what can be done to improve the efficiency of credit union estate operations. This includes decreasing the time to administer deceased members’ accounts, retaining assets currently lost on death of the member, attracting consolidated and new assets, and advancing the executor experience.

Using Qualtrics XM survey technology, we emailed credit unions across Canada. We found consistent themes of underinvestment and lack of focus, even with the risk of large outflows of funds in the event of member deaths. Our research has identified ways to improve the effectiveness of estate operations within credit unions and offers a series of opportunities designed to achieve operational and executor excellence.

The opportunities

Build relationships with the next generation

Credit union membership is close to double the national average in the percentage of members in the 65+ demographic. This means credit unions have the potential to engage with non-members who will serve as executors and beneficiaries to deceased member estates, resulting in new membership opportunities. Providing this younger generation referrals to sophisticated wealth advisors or experienced retail advisors, with the appropriate investment of estate assets, will build confidence in them. And by nurturing these relationships today, credit union advisors will have the opportunity to extend these relationships now, not just when an estate falls into administration.

Improve efficiency to ensure a positive experience

  • Provide an accurate summary in a timely manner

    On average, it can take an executor 12 to 18 months to complete the full estate administration process—and a lack of specialized skills can contribute to setbacks. Sixty-five per cent of credit unions manually prepare their estate summaries, which, due to clerical errors, can potentially further these delays. As an example, if a credit union takes longer than six months to finalize and close an estate, they may need to update from manual to automatic summary generation to avoid data errors. On top of that, 24 per cent don't provide them at all—which is a concern, since executors need this information for probate and tax purposes.

    To provide a positive experience, credit unions need to implement corrective steps to finalize and close member accounts and provide accurate estate summaries.

  • Establish realistic expectations and provide executors information to assist in their role

    Thirty-one per cent of credit unions do not have service standards for estate operations and, of those who do, 36 per cent do not explain what they are. Implementing service standards on timelines will give the executor confidence that the estate will be handled properly and enhance their experience. Further, providing an estate information package will give advisors the opportunity to explain executor's responsibilities with the proper information.

  • Use data to drive strategy

    Forty-seven per cent of credit unions do not monitor the total annual dollar value of assets leaving the credit union. Collecting data drives strategy—you can only close the gaps if you know where they are. Credit unions should consider implementing automated analytics monitoring, so expert advisors can retain and onboard client assets, not just view them as assets leaving the credit union.

Increase the wealth portfolio

Sixty-one per cent of credit unions do not consistently refer executors to internal wealth advisors, and 65 per cent do not consistently refer beneficiaries. Performance targets for estate operations can help retain assets and channel new assets, all while positioning the credit union as a leader in advisory services.

Consider whether an estate administration or closing fee is appropriate

Only 33 per cent of credit unions apply an estate administration or closing fee. Implementing an estate administration fee can reduce staffing costs associated with the process.

Train your estate operations staff

When asked about key challenges, credit unions identified delays in administering the estate, processing errors, providing incorrect information, providing a poor experience, and reputational concerns. Proper training of front-line employees handling estates can mitigate these errors and increase job satisfaction.

Develop strategies

Asset retention and consolidation, executor experience, and training front-line branch staff in handling estates are priorities for credit unions. With each strategy, it is imperative to define key department roles, invest in talent development, build long-term relationships with executors, and ensure employees are more comfortable and have a positive experience handling estates.

Roadmaps for success

If you're interested in identifying opportunities to streamline operations, develop strategies for asset retention and consolidation, and need help with staff training, Concentra Trust can provide a current-state assessment and a future-state design and roadmap for success.

Contact us

Joan McAulay
P: 306-956-4956
E: Joan McAulay

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