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Not Working With Several Generations of Clients? You Should Be

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Generations X and Y are no longer young children, and over the next decade they stand to inherit large sums of money. But once wealth is inherited by the next generation, only a small number of new-wealth holders tend to keep their parents’ advisor. If you are not already working to engage the next several generations of clients, you risk declining assets and a future scramble for new revenue sources.

Many firms are just starting to realize that they need to start building relationships now with their clients’ children and grandchildren, and they are not sure where to start. For these firms, they can take some lessons from the firms that have been specializing in multigeneration families all along. These firms have already learned that communication is the key to retaining those heirs.

  • Multigenerational firms ask about helping children early on. When working with a wealthy family, they often offer parents counsel and financial education for their children no matter what their age or financial circumstances. Some parents are very concerned that their offspring don’t know how to handle money well, let alone investments and accumulated wealth. Reaching out to younger family members, these firms offer introductory lessons in budgeting and savings advice to establish a personal relationship with them early on. This can also introduce them to how the firm currently handles their parent’s legacy. Sharing expertise across the generations goes a long way towards strengthening relationships with current clients, as well as their children, and prepares the next generation to eventually manage their wealth more successfully.
  • Multigenerational firms also talk about the children in every estate planning conversation. They recognize that many parents worry about how inheriting wealth will affect their children, and if they’ll be able to absorb the financial values the parents hope to impart. When discussing their clients’ estate plans, these advisors encourage them to voice their legacy concerns, so the advisors can begin suggesting ways to involve the children early on.
  • Multigenerational firms also reach out to estate planning attorneys to build relationships. This puts the advisor in a better position to communicate with the children during the estate planning process and to support a smoother transition during the estate settlement. A relationship with the attorneys strengthens the advisor’s role as a family insider and a source of information for the new heirs.

For firms that haven’t followed these practices, it is not too late to start. The children may be grown and no longer in need of budgeting advice, but the grandchildren may need it. Adult children may have their own financial advisor, but still be open to an offer for a “second opinion.”

If clients are updating their estate plans, it’s a perfect opportunity to include the next generation in the conversations. Anyone with a family or some accumulated wealth needs a basic estate plan; advisors can use the parents’ review as a door opener to their grown children.

Many advisors spend years successfully helping wealthy clients only to lose the assets when the wealth passes to the children. The number one reason for this loss is that the children have never had any contact with the advisor. Today, many advisors are realizing they need to build new bridges to grown children if they hope to keep their clients’ assets for years to come.  These advisors can start by borrowing some of the communications techniques of firms that have long specialized in working with multigenerational families.                                   

Elizabeth Miller, CFP, is founder and president of Summit Place Financial Advisors in Summit, N.J.

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