Understanding the opportunity—and risk
Only 42% of advisor practices currently offer intergenerational financial planning.1 Perhaps that’s because it’s typically viewed as a service for ultra-high and high-net-worth (HNW) families. We need to change this mindset. Non-HNW households control 58% of the wealth that’s expected to change hands,1 and they need guidance to help ensure a smooth transition.
Choosing not to go after that wealth by offering intergenerational financial planning may make it hard to retain transferred assets. More than 70% of heirs are likely to fire or change financial professionals after inheriting their parents’ wealth.2
Creating your intergenerational financial planning strategy
Adding intergenerational financial planning to your practice doesn’t require too much of a pivot in strategy or skills as it involves the same core concepts of any client relationship. You have to build trust, demonstrate your value, and address needs.
Proactively bring children into the discussion
As a first step, consider asking your clients to include their adult children—and grandchildren—in your conversations. By participating in the meetings, they can get to know you and you can get to know their interests, needs, and goals—which may be different than their parents. Showing that you care about them as individuals can help you build a foundation of trust. Keep in mind that not every client may be receptive to this idea for various reasons, including strained family relationships, and it’s important to respect their decision.
Offer financial education
Many young people have limited knowledge about investing and other aspects of financial planning. Positioning yourself as a resource can help you build trust while showcasing your expertise. Fifty-six percent of surveyed advisors said holding informational meetings has proven to be the most effective means for developing business relationships with their clients’ children.1 For your most valued relationships, you might offer to meet one on one with the children to answer their questions and explain different concepts. To engage a broader audience, you could develop a series of virtual or in-person, next-gen financial workshops that cover:
- Creating a financial plan
- Investment basics
- Saving for retirement
- Budgeting and debt management
- Insurance and estate planning
As you scope out your education strategy, be sure to contact the retirement plan and fund providers that you work with. Many offer presentations that you can use—saving you time and resources.
Adapt your service model
Millennials and Gen Z have grown up in the digital age, and many prefer video calls, text messages, and emails over face-to-face meetings. They also expect an online experience that makes it easy to view their accounts, get support, and access digital tools and resources. If your service model doesn’t currently deliver this experience, you should consider making some adjustments to better blend your human and digital interactions to help you connect with young investors. Be sure to involve your compliance, IT, and operations teams in any discussions. They’ll help you determine which ideas are plausible from a regulatory and business perspective.
Additionally, you should assess your firm’s social media presence on LinkedIn and other platforms. It’s one of the first things many people check when deciding to work with a financial professional. Plus, it can be a way for you to build digital relationships that potentially turn into business opportunities. Your compliance team should be involved in this discussion as well.
Consider pairing junior and senior advisors
People generally prefer to receive advice from financial professionals to whom they can relate. As part of your intergenerational financial planning strategy, consider pairing your firm’s senior advisors with more junior ones, if you don’t already. The junior advisors can serve as the primary contacts for your clients’ adult children, helping to build that foundation of trust. They’re also good candidates to manage your next-gen education program. After all, they likely share similar experiences with the target audience, which can help increase engagement. And there’s another reason to consider a team approach—succession planning. When the time comes for your clients to transfer their wealth, you could transition the relationships to the junior advisors.
Stay current on industry trends
Your clients’ children will likely have their own investment preferences. For example, they may have a greater interest in environmental, social, and governance (ESG) funds or cryptocurrency. Staying abreast of industry trends, such as these, can help you have consultative conversations with the younger generations that demonstrate you understand what’s important to them.
Make yourself the logical choice
The Great Wealth Transfer has begun, and the competition to retain and capture these assets will be fierce. Providing intergenerational financial planning can help set you apart and show clients and, more importantly, their children and grandchildren that you’re the right financial professional to help ensure a smooth transition.
1 The Cerulli Edge, U.S. Advisor Edition, 2Q 2022, Issue #75. 2 The Cerulli Edge, U.S. Advisor Edition, 3Q 2021, Issue #72.
Use of the tools and resources indicated may be subject to approval by your broker-dealer. Please check with your firm prior to use.
The content of this document is for general information only and is believed to be accurate and reliable as of the posting date, but may be subject to change. It is not intended to provide investment, tax, plan design, or legal advice (unless otherwise indicated). Please consult your own independent advisor as to any investment, tax, or legal statements made.