6 practical steps you can take to help clients prepare their families for inheritance (and why it matters)
You may already have started to see a wealth move within your practice from the baby boomer generation to their children. But are you capitalising on the opportunity this ongoing trend represents?
A report from Schroders predicts that the coming years will see trillions’ worth of investible assets and housing wealth move to millennials.
The transfer of family wealth will be an enduring trend for the financial services industry and advisers over several decades.
The potential opportunity for financial advisers is vast
The potential opportunity for financial advisers is vast, but for those failing to capitalise on the trend it could present significant risk.
Research shows that 65% of inheritors don’t expect to use their parents’ adviser after an inheritance.
And this is further supported by 75% of women moving financial advisers when they inherit.
A massive amount of money is poised to change hands
Over 80% of advisers surveyed believe intergenerational planning is currently the biggest opportunity, yet many have yet to put any strategies in place to address this.
Meanwhile, only 9% of advisers said that they are already facilitating family conversations to help manage this transfer.
You may be among those advisers who take it for granted that you’ll manage your client’s assets as they transfer through the generations, but it won’t happen by chance.
Inheritance is the point at which you are most likely to lose the assets, so work ahead of this.
Many financial advice firms have an ageing client base, so it’s vital that you take steps to ensure you’re addressing the needs of millennials and able to engage and serve their needs.
Here are six practical steps you can take to help you address this risk and convert it to an opportunity for success.
1. Audit your business
Auditing your business will help you understand the assets you have under management for your clients. This exercise will highlight how much fee income may be at risk if you don’t implement an intergenerational wealth strategy. It’s the perfect way to focus your mind on the issue and spur you on.
2. Understand the next generation
Millennials grew up in the age of the internet. They embrace technology, social media and smartphones. This combines to make their expectations around communication and access to services very different to that of their parents. We’ve previously looked at 4 ways to win younger clients.
3. Review your proposition
Does your proposition span the generations? You may find it useful to segment your client base and develop distinct propositions from there.
Consider which product or investment requirements client segments are most likely to require, the service you are offering, how you are charging, and how you can use technology to support or enhance your service.
Where segments form a single family, consider crafting an overall “family office” proposition and use a family financial plan that encompasses the current and future needs of each individual party.
This approach will help you form a relationship with the whole family.
The earlier different members of the family are involved in the conversation, the better.
4. Don’t delay
With 65% of inheritors choosing not to continue to use their parents’ adviser, it’s unwise to put off the moment you engage. Including children and family members early may make all the difference between retaining the business and losing it.
Start from an educational stance. Rather than focusing on the wealth or property value, make the initial conversation about goals, principles and attitudes to inheritance. This is also the ideal opportunity to cover basic tax and legal structures.
5. Think about your relationships with spouses of clients
The first point of wealth transfer is often from spouse to spouse. Do you have good rapport with both clients in a relationship?
75% of women move financial advisers when they inherit. Make sure you build a strong relationship with both members of a couple and ask yourself what steps you could take to enhance your female-focused proposition.
We cover this in more detail in this article about what financial advisers worry about.
6. Take a holistic approach to families
Consider hosting free financial reviews or low-cost coaching sessions for your clients’ children. You could provide this over Zoom or other video conferencing to make it convenient for them and an easy proposition to agree to.
You could even create short informative videos and post them on YouTube with an invitation to ask questions in the comments, which you can later transition to private messaging or email.
Once connected, stay connected
Add the children of your clients to your client email newsletter or other regular communications to help keep your firm and the services you provide front of mind. If you have a social media strategy in play, connect there too.
If you have a client portal, consider setting up an emergency area to contain digital copies of critical documents in the event of an emergency. This will naturally lead to other members of the family needing access to the portal, as well as to you and your firm.
Where does AdviceBridge fit in?
AdviceBridge has developed an automated digital solution specifically aimed at meeting advisers’ needs in engaging clients across the generations.
The illustrative interface creates greater touchpoints and helps increase familiarity and greater trust. Clients can update information 24/7 helping you to deliver timely advice in a way that appeals to millennials and their parents.
Find out more about our service and how we can help you by emailing firstname.lastname@example.org or call us on 020 3925 3850.