Next Generation: How to retain assets when transferring wealth to clients’ children

Posted by Pete Muckley, VP of Marketing on November 7, 2016

Consider this: over the next 30 years, $30 trillion is expected to be passed down from baby boomer parents to their Generation X (1965-1980) and Generation Y/millennial (1981-2000) children.[1] And 66% of those children do not retain their parents’ financial advisors after they receive an inheritance.[2] As a result, many advisors are seeing their asset base – as well as the value of their business – shrink amid this generational wealth transfer.

According to a recent survey by InvestmentNews, advisor respondents said that lack of a relationship with clients’ children was the biggest obstacle to retaining assets passed to heirs.[3] Clearly, the writing is on the wall: to ensure the long-term health of their business, advisors must find ways to connect with their clients’ children and become the trusted family advisor. Given that only 20% of advisors today are targeting their clients’ younger family members, the opportunity is enormous.[4]

Here are some ways you can engage the next generation and begin building a sustainable business for the future.

  • Gather as much information as possible about your clients’ children. In your initial meeting with clients, make sure your client discovery questionnaire includes a section where clients can provide their children’s names, ages, contact information (physical and email addresses and phone numbers), birthdates, employers and hobbies. Set up customer relationship management (CRM) profiles for each child.
  • Include adult children in planning meetings. Although these conversations can certainly be uncomfortable, emotional and sometimes even contentious, they are imperative to ensuring a smooth transition of assets after your clients’ death. See if your client would be open to the idea of holding a family meeting. Use this family meeting to educate and build trust as you demonstrate your value to your clients’ adult children. When they understand and appreciate your role in managing and growing their family’s assets, you have effectively solidified your position as the family’s lead wealth manager.
  • Offer to assist clients with major events in their children’s lives. You will become your clients’ indispensable wealth management partner when you put your expertise to work helping their children manage their financial lives. Your guidance regarding managing student debt, purchasing a first home, combining finances in marriage, starting a business or advising on a trust for a child will be welcomed and appreciated both by your clients and their children.
  • Communicate with Gen X and Gen Y using the tools they prefer. Easy, anytime access to information via the Internet means that Gen X and Gen Y are do-it-yourselfers in virtually every aspect of their lives, including investing. Both Gen X and Gen Y are highly dependent on technology, so a robust digital presence is absolutely essential. It starts with your website, which should accurately reflect your value proposition and the services you provide. Keep in mind that the “cyber generation” craves distinctive experiences, authenticity and valuable information delivered in bite-sized, eye-catching ways.
  • Bring younger advisors into your business. The average age of advisors today is 49. For that reason, younger clients may prefer to work with advisors closer to their own age who are in a better position to understand and relate to their challenges and concerns. What’s more, younger clients may be reluctant to hire an advisor who likely will be retiring many years before they do.

In seeking to turn your clients’ children into clients and evolve your business for the future, it’s best to begin building connections as soon as possible. Addressing wealth transfer early on with clients enables you to differentiate yourself from your peers by showing them you are a trusted partner who cares about the future success of their family. This is critical given that 70% of family money disappears by the end of the second generation, and 90% is gone by the end of the third.[5]

[1] Roadmap For A New Landscape: Managing the Transition of Wealth Across Generations. State Street Global Advisors, October 29, 2015.

[2] InvestmentNews Data, as cited in “The great wealth transfer is coming, putting advisers at risk” by Liz Skinner, July 13, 2015.

[3] Ibid.

[4] The Changing Face of Financial Advice: 2015 and Beyond. Corporate Insight, February 2015.

[5] Williams, Roy, and Vic Preisser, 2003. Preparing Heirs: Five Steps to a Successful Transition of Family Wealth and Values.


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