One of the most popular topics featured at the largest financial advisor conferences over the past decade is “Next Gen” opportunities. Whether focused on the “Great Generational Transfer of Wealth” or “The Next Generation of Financial Advisors”, both have a direct impact on the aging population of financial advisors and their clients.
According to research firm Cerulli and Associates, the average financial advisor is 51 years old and nearly 40% of all advisors are within 10 years of retirement. Advisors that are near, or part of this rapidly growing category are seeking opportunities to transition their practices to younger advisors, as well as looking for ways to connect with their clients’ next generations who will be inheriting the assets advisors currently manage.
Initiating and developing relationships with current clients’ children and younger heirs can be a significant factor in crafting a successful succession plan that will insure current assets stay with your firm creating revenue continuity and generating new clients that can be served by an advisor’s younger successor.
It’s no secret that this next generation of investors who will inherit trillions of dollars from their parents and grandparents over the next few decades often prefer to work with an advisor in their own age group.
A 2015 survey by Deloitte found that for clients who had children using advisors, over half were not working with their parents’ advisor.
Additionally, a Vanguard study indicates that 95% of children fire their parent’s advisor upon receiving an inheritance.
Tragically, many advisors first interaction with the client’s heirs is when they are grieving the loss of a parent. Many advisors are unaware of their client’s estate plans and how assets will be passed on to their heirs. Advisors often fumble with techniques and strategies to connect with their clients’ children and younger heirs.
Advisors are certainly not entitled to meet their client’s children.
Simply asking your clients to introduce you to their children can often be awkward and uncomfortable for both parties.
Additionally, some parents are reluctant to speak with their children about money and might feel awkward about letting their kids know how much they may inherit.
Here are some simple and authentic questions and topics that can be integrated into regular client meetings to bridge this gap and initiate a substantive conversation with your clients and their heirs:
- Are your clients planning on leaving assets in trust to their heirs? Why or why not?
- Are they interested in having you continue to manage the trust assets upon their death or incapacitation?
- Who is named as the successor trustee and how a traditional Bank/Trust company in this role will cut you out?
- Are they considering passing IRA and Qualified plan assets directly to heirs or to a trust?
- Discuss the Pros and Cons of naming a child or family member as a successor trustee and/or executor.
- Are your clients aware of the “advisor friendly” trust model that will allow you to handle the asset and relationship management in conjunction with an institutional trust company as successor trustee?
- Introduce your clients to “suggested trust language” that will name you as their “preferred” advisor upon their incapacitation or death.
- Leverage “life events” such as marriages, divorces, births, and higher education to revisit your role as a “preferred” advisor.
- Position yourself as a resource and future financial mentor in the family’s estate planning strategy and development.
- Consider a referral association with a local estate planning firm that understands your role in the process.
Whether your client’s children are pre-adolescent or embarking on creating their own wealth, establishing your role as a “preferred” advisor in their estate plan will insure both you and your successor will have a seat at the table as assets shift to the next generation.
