Aim for Several Generations of Clients

Gen X is well into their acquisition phase, and Gen Y is no longer composed of young children—over the next decade, they both stand to inherit large sums of money. Once this wealth is inherited by the next generation, there will only be a small number of new-wealth holders that retain the previous generation’s financial advisors. If you have not begun to work to engage the next several generations of clients, your firm is at risk for declining assets and a scramble for new revenue in the not-so-distant future.
A large number of firms are just beginning to realize that it’s crucial to begin building these relationships with their clients’ children and grandchildren now, and they are not completely sure how to start. These firms can take a lesson from firms specializing in multi-generation families the entire time. Here are some tips that financial advisors can glean from these firms to be impactful for generations to come:
Ask about helping children and grandchildren early on. When you are working with high net worth clients, offer them counsel and financial education for their children or grandchildren—no matter the age or financial conditions. You may find that there are many parents who have great concern that their children don’t know how to handle money well—let alone investments and accumulated wealth. By reaching out to these younger family members, financial advisors can offer introductory lessons in budgeting as well as savings advice and establish these personal relationships early on. Doing so with the next generation can go a long way towards building relationships with current clients and their children, as well as preparing the next generation to handle their future wealth more successfully.
Talk about the children of your current client base in every estate planning conversation. Many parents are concerned with how inheriting wealth will affect their children, and if they are prepared with the financial values, the parents intend to pass on. When a financial advisor discusses clients’ estate plans, it’s also important to encourage them to voice any legacy concerns and then suggest ways to involve the children early on in the process.
Reach out to estate planning attorneys to build relationships early on. This gives the financial advisor an advantageous position to communicate with clients’ children during the estate planning process—and to support a smoother transition during estate settlement.
If your firm hasn’t begun instituting these practices, it’s not too late to start. The next generation may be grown and no longer needing budgeting advice, but grandchildren may need it. Adult children could already have their financial advisor—but they could still be open to second opinions.
If your clients are updating their estate plans, this presents a perfect opportunity to start including the next generation in these conversations. Anyone that has a family or some accumulated wealth needs a basic estate plan—advisors should use the parents’ review as a way to open the doors to the clients’ children.
Many firms have spent years successfully planning and helping wealthy clients—only to lose these assets when the wealth is passed on to the children after death. One of the top reasons for this happening is that the children never have a relationship or even speak to the advisor. Financial advisors must realize they need to build these bridges with grown children if they want to prepare their firm for the future, and maintain their clients’ assets for years to come.