Trillions of dollars in wealth may be moving from baby boomers to their heirs, but some financial advisors may not be delivering needed advice because they lack connections with all family members.
For many advisors, making connections with the next generation of investors can be challenging. A first step is to get to know the children. In a 2015 survey, InvestmentNews found more than half of advisors polled meet with the children of clients less than once a year, and more than 18% do not meet with any of their clients’ children. An additional 17% reported they meet just once a year with children of clients, and only 8% cited having two or three meetings per year.
In fact, generational wealth transfer was ranked the third-highest business risk by advisors in the survey, following “heightened regulation” and “attracting new clients.”
The biggest obstacle to retaining assets passed to heirs is a lack of relationship. In the survey, some advisors reported that children spend assets too quickly. It is also difficult to make connections when an inheritance is split among multiple heirs. Other challenges may arise if clients are unwilling to include their adult children when meeting with their advisor, or the children are not interested in working with the same advisor used by their parents.
Still, advisors can build those relationships in many ways. Here are five ideas:
1. Promote intergenerational wealth transfer as part of the business value proposition.
2. Build a broad network of tax and legal experts that can provide solutions for the entire family. Expand the list to include those with experience in long-term care insurance, real estate, and Social Security.
3. Develop relationships by starting with a spouse. Invite the spouse to planning meetings and look for opportunities to meet with heirs.
4. Develop processes that position the advisor as one of the first contacts when developments occur within the family. Consider adding junior members to work with adult children.
5. Get tech savvy. The next generation probably uses technology more than their parents. Using social media, such as LinkedIn, is a way to make connections with younger generations.
For informational purposes only. Not an investment recommendation.
This information is not meant as tax or legal advice. Please consult with the appropriate tax or legal professional regarding your particular circumstances before making any investment decisions. Putnam does not provide tax or legal advice.