40+AdultmanWith $30 trillion in wealth being transferred between generations now and over the next decades, advisors are missing a huge opportunity.  If you are fine with losing your chance to retain the next generation after your current clients transfer their wealth, do nothing different.  You can count on 66% of your client’s heirs taking their business elsewhere.  If you would like to change the odds for yourself, you need to do a lot more than “get to know your client’s family”.

That vague advice will not result in adult children of your current clients seeing you as a desirable person to trust.  If you want to establish relationships with the heirs, take the advice of those who have researched this problem of client flight and do more.

 

“Bringing up wealth transfer with clients shows them you care about the future success of their children; it can be a huge differentiator,” said Diane Doolin, an adviser with Morgan Stanley Wealth Management, speaking to Investment News. “It’s not just about advisers losing assets when the clients die, it’s about taking the current relationships to a deeper level.”

As we see it at AgingInvestor.com, having a plan to prepare your client’s heirs for wealth transfer is an essential ingredient in successful transfers.  That means that you will have to spend time with your client to develop understanding of their plan for wealth transfer. Who are the heirs?  Where are they? Are both your client and the heirs willing to meet to discuss the plan for the future and to learn how to become good stewards of the wealth?

Once you learn who the players are and determine that your client is willing to put time into their potential success with the inheritance,  you will need to establish a method for the heirs’ education.  This is not a simple, “have a couple of family meetings” approach. Rather, we advocate a thorough, hands on, goal-specific series of meetings with the intended recipients of their parents’ wealth to teach them how to best handle every part of that legacy. This includes the parts of the estate that the advisor does not personally manage. That may include the family business, real estate investments, and other holdings.

The advisor has the opportunity to take a leadership role in bringing the family’s existing managers and experts into the conversations.  If the family doesn’t have enough capable teachers among those managers, develop some experts of your own in these fields, people you can trust to offer the needed guidance to help heirs. Any heir who understands the complexity of the wealth she will be obligated to manage after it changes hands has an improved chance of maintaining or growing that wealth.  You, as the advisor can play a key role as leader and facilitator.

If this sounds like a big and time consuming venture, it is.  Depending on how much is at stake, it will be well worth it to establish yourself as a leader and resource for the family so that they can learn how to best preserve and wisely use what their elders have created.

As Williams and Preisser have concluded after researching wealth transfers among thousands of families, the family fortune is lost by the heirs 70% of the time with the first wealth transfer and 90% of the time by the second generation transfer.  If you want your client’s family to succeed and they want to succeed also, you have a golden opportunity to be a prime mover in educating these heirs.

Being an advisor to your client is one thing. Bringing the children and grandchildren into the conversations about how to handle and preserve wealth is another.  If you want to play a prominent role in leading the way to the family’s understanding of their assets and responsibilities, you can.  Not every client will be willing. But for those who accept your leadership, you have a chance to establish yourself as an important and critical player in bringing about a successful wealth transfer plan and at the same time, you maximize your relationship with the heirs.

That relationship gives you the best chance to keep the next generation of clients.  Remember that most of your clients’ heirs who do not want you to continue to manage the assets after your client passes will leave you because they don’t have a relationship with you. They want to work with someone they know and trust.

Our six-module training courses explains what you need to know about working with aging clients. All 6 courses are available on-line and certified by the CFP Board for continuing education credit. This training will help you avoid the risks of inaction so you can move ahead right now in your practice. CLICK HERE to find out more about our courses.

Please come back and visit us again.

Carolyn Rosenblatt, RN, Elder Law Attorney
Dr. Mikol Davis, Psychologist
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