The impending intergenerational wealth transfer, says Susan Fulford, vice president and senior advisor with TD Wealth in Toronto, represents “a new age and stage, not just for [financial] advisors but for their clients.”
Advisors now have an opportunity to prepare for the transfer of baby boomers’ wealth to their children. You could be attempting to develop relationships with the next generation — your clients’ children.
Fulford, who works in her firm’s ultra-high net-worth group, provides four steps toward establishing those relationships:
1. Understand the family dynamics
Your relationship with your client’s children should begin as soon as you take on the client — that is, if the client wants to leave his or her children an inheritance.
Some parents choose not to plan for their children’s financial futures, Fulford says: “They want [their children] to make their own way. As an advisor, you must respect that.”
If your clients are planning on to transfer their wealth to their children, you can discuss what your clients want their legacy to be and how they can begin preparing for a smooth estate transfer.
2. Offer services for young adults
Even if you have not met those sons and daughters, inform your clients that you would be happy to talk to their children about financial issues relevant to young adults.
Approach the topic during annual reviews by asking clients what has changed in their lives and their children’s lives.
“There will be milestones as these children grow,” Fulford says, “and you can extend services through the client relationship.”
These young adults may need help in managing debt or saving for their first home. Your assistance not only helps develop a relationship with the next generation but also can add value to your relationship with their parents, who will appreciate your efforts.
3. Plan events designed for the next generation
Invite the children of several clients to a financial seminar.
Getting a group of young adults in a room together presents a “powerful opportunity,” Fulford says. “It makes them feel more at ease and they’re more apt to be inquisitive.”
What are this generation’s concerns? They probably want to know how to save for a vehicle or a home. This is an opportunity to address those topics and show them how you can help.
4. Be willing to refer them to another advisor
Even if your client’s children have grown up knowing you are their parents’ advisor, that does not necessarily mean they will want to continue that relationship.
Instead of valuing your experience, Fulford says, they may think of you as being “too old.” They may want to work with an advisor closer to their age.
You can regard this situation as a chance to keep the relationship within your firm. Fulford suggests facilitating an introduction to a colleague in your firm who is well-suited to meet those young clients’ needs.
“Why have a client go elsewhere,” Fulford says, “when we can make it seamless? You can refer [them to] not just any advisor, but the best professional.”
This is the first instalment in a two-part series on intergenerational planning.
Next: Financial planning for young adults.