“Wealthy clients often have such concerns,” says Justin Fulton, principal and client strategist at Signature, a Norfolk-based family office firm. “We attempt to discover the source of those concerns and address them.”
Long conversations with clients can be part of the process. “Especially if the children are relatively young,” says Fulton, “we’ll tell clients to remember what they were like at that age. Just as they changed as they raised families and became more involved in their careers, so they can expect their children to change, too, and become more responsible.”
Regardless of the age of the heirs, inheritance planning generally includes a family meeting or series of meetings. Financial advisors can play a key role by suggesting a meeting site and by setting the tone.
“If one goal of the meeting is to acquaint younger family members with our firm and what we do,” says Fulton, “we might hold it at our office. Otherwise, the meeting might be at someone’s home or, if a neutral site is preferred, someplace like the meeting room at a country club. In any case, we’ll start the meeting by telling everyone that what’s said will be private, and that the purpose is to provide valuable information. We want everyone to feel comfortable.” Part of this comfort level, for the client, is determining who will attend: just children or children’s spouses or grandchildren or even a child’s serious girlfriend or boyfriend.
Once the proper framework has been established, a family meeting can be “eye-opening” to HNW clients who hear things from their children’s point of view, according to Fulton. “The children might ask what they should do when one parent dies,” he says. “They might want to know how the family business is run, where the parents’ assets are kept, and what the parents expect them to do with those assets, after they inherit.” A family meeting may be an ideal time to identify key professional advisors such as estate planning attorneys and tax preparers.
Just as family meetings provide HNW clients with a chance to hear from their children, it also gives those clients an opportunity to raise important issues. “Wealthy individuals generally want to transfer financial skills to their children and grandchildren,” says Fulton. “They might want them to be cautious about taking on too much debt, for example, or want them to make good investment decisions.”
Via family meetings or direct conversations, HNW clients and heirs can explore possible learning opportunities for enhancing financial skills. Children and grandchildren might work in the family business or participate in managing investment property; younger generations can get involved with a matriarch or patriarch on charitable gifting. “A financial advisor can be a facilitator in all of these areas,” says Fulton.
Talking about wealth with HNW clients and their heirs can be challenging. Nevertheless, financial planners can encourage such conversations, helping affluent clients to pass on their values as well as their money.
- Estate Plan Design: 5 Key Questions for Clients
- Intergenerational Planning: Get Clients Talking Now
- How to Have the Money Talk With Kids
- Targeting Wealthy Clients: Understand Their Source of Wealth