Top taxfilers see incomes rise

Your baby boomer clients’ children and grandchildren could be the key to your success as a financial advisor in years to come. Members of Generation X (those born in the 1960s and 1970s) and Generation Y (those born in the 1980s and 1990s) are set to benefit from the transfer of potentially large sums of money from their parents or grandparents. And advisors must take steps now to retain the assets that will be handed down.

“You be able to work with individuals from different generations who have different investment habits and different communication preferences,” says Francis D’Andrade, vice president, private client services, with Forstrong Global Asset Management Inc. in Toronto.

For example, D’Andrade says, Gen Y clients tend to rely on peer-to-peer recommendations, largely through social media. “They prefer succinct, bite-sized mobile communication that is simple, simple, simple,” D’Andrade says. Those communications must adhere to the rules of “recency and frequency,” he adds.

You must be able to convince the heirs of baby boomers that you can meet their needs on their terms, D’Andrade says. While you may believe that you can offer them something of value, “they generally don’t trust anybody who is older,” he says.

Here are some ways to retain the assets that will be inherited by the Gen X and Gen Y children and grandchildren of your baby boomer clients:

> Build family relationships
Focus on making your client relationships a family affair, D’Andrade says. Invite clients’ children and grandchildren to social events, where they can all participate. For example, you might invite your clients and their families to lunch or dinner, a golf tournament or some other event where you can interact with them.

The ultimate goal is to get your clients’ heirs to know you so that you can talk to them about their finances.

> Build a young team
D’Andrade recommends hiring young advisors to whom younger potential clients can relate. Enable the younger advisors on your team to participate in family events or participate in client meetings when discussing the transfer of wealth.

“Empower them to participate,” D’Andrade says.

Another great way to engage your clients’ children and grandchildren is to get your younger advisors to host a financial literacy session for them. A young advisor will speak a language that the young heirs understand. Your goal is to make the heirs comfortable in the knowledge that you have the necessary people and strategies to handle their needs.

> Offer a complete package
In order to deal with wealth transfer issues, you should have sound capabilities in estate planning, even if it is through a reliable partnership. If you do rely on a partnership, you will have the background information on clients, and must be seen as playing a key role when meeting with clients and heirs.

Your goal is to retain some control over the estate planning process for your clients so that you can provide advice to their heirs.

> Be strategic
Let your baby boomer clients know how you can help implement strategies for the beneficiaries of their wealth.

“In most cases they will appreciate such guidance,” D’Andrade says, “because they want to ensure that their money is put to good use.”

For example, you might encourage your clients to set up a registered education savings plan (RESP) for their grandchildren, with the parents (that is, the baby boomers’ children) as owners of the plan. This way, your clients (the grandparents) are contributing to the plan, giving you access to their children as well as their grandchildren.

Photo copyright: payphoto/123RF