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Hanging on to clients’ loved ones

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Studies show that 80% of the widows and about two-thirds of the kids of clients who have died ditch their advisers.

Although every situation is different, this high attrition rate is largely because one person in the household often looks after most of the financial matters. Advisers may have mainly worked with this person only for convenience and unintentionally left out the other spouse and family members.

This is obviously a poor outcome for a variety of reasons, but high on the list is that losing these clients doesn’t help the practice in terms of succession planning, whether that means an eventual sale or passing the firm to another adviser.

Preventing attrition of family members may be worth the extra effort, which can be a little more work or a lot of changes, depending on how current the firm’s processes and technology are.

For starters, firms should always establish trust with the other spouse. Even if only one spouse is the point of contact, advisers should always deliver the documents to both so that he or she is in the loop.

It is also important to win the trust of female clients and listen to their stories and relate to their feelings.

Most female clients are interested in having a connection with their advisers. If advisers win the trust of female clients, they will likely be loyal and become a great source for referrals.

In terms of a client’s children, be cool, consistent and give them control.

Younger people tend to be anti-authority, resourceful and tech-savvy, so give them a portal and encourage them to do the “chores” that their parents may ignore such as aggregating family accounts or taking a holistic risk capacity questionnaire. All these things not only give them a sense of control to stay engaged but also helps advisers identify additional needs and boosts their wallet share.

For extra credit, use lighthearted language and stories to communicate with clients’ adult and teen children. Follow them on social media if compliance allows this and exchange trading ideas.

Finally, plant the seed to help more people in the family by showing them how the firm’s solution can take care of both the parents and grandkids. These may be difficult and emotional conversations that necessitate a delicate touch, but addressing them can make the adviser indispensable.

Typical baby boomer or Generation X clients likely have aging parents who may be healthy and outlive their savings or need medical and long-term care. Both are great problems for advisers to tackle with the appropriate plan and products.

Human capital factors are key to this conversation. Assets, geography, health, income and quality of life are all part of constructing a financial plan that will lead to more comfortable and happy twilight years for clients’ family members as well as the advisory firm.

This story is part of a 30-30 smarter succession planning.

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