The holidays are coming. Every year I sit down to update this article and I never do as I am reminded that not everything needs to change. That’s because the business of financial advice starts and ends with trusting relationships. Someone once told me, “Nobody cares how much you know until they know how much you care.” Let’s start with some numbers. The average age of a financial advisor is approximately 55 years old, and the average age of wealth management clients now stands at roughly 64 years old. While estimates of intergenerational wealth transfer vary, everyone agrees that the number is huge. Recent estimates state that over the next 10 years, around $60 trillion in financial assets are expected to pass from the Baby Boomers to their Generation X and Millennial children. Successfully navigating this transition is of critical importance to clients and to those financial professionals that wish to transition their practice to a younger generation and eventually retire themselves.
There is nothing as personal and potentially complicated as planning for an aging client. From an advisor’s perspective, there are two challenges that the industry must rise to. The first is that people are living longer in retirement and this huge wealth transfer is going to be more of a drip than a deluge. As boomers age, their children will play a bigger role in their care and in their financial lives and will likely not simply be generational inheritors of wealth. The second challenge is that some financial advisors are not doing all that is necessary to get to know the next generation. As a result, those advisors are becoming less involved in the parent and child financial conversation. Estimates range from 65% to as high as 97% of children inheriting assets eventually leave their parent’s financial advisor. All the work that these financial advisors are doing to help clients plan their entire financial lives may simply end with the death of the primary client.
This is where the experience advantage can really payoff. One of the most important attributes for a financial advisor is their holistic family practice value proposition. Regardless of the generation, wealth management clients want to work with advisors that understand their priorities and can help them reach generational family goals. Getting this idea across to the next generation is critical to success in the advisory space, and the holiday season is an excellent opportunity to do just that. Use this holiday season to get know people in times of warmth and celebration. We all know that business can slow down this time of year but consider this period as the best opportunity to engage other family members. It’s an opportunity to make that real emotional connection between the plan and the people who served as motivation for the plan in the first place.
The holidays are a time when family and friends tend to congregate at the family home. Many of your clients will gather together with their children, grandchildren, and other relatives. In some cases, they are cooped up for the week with not much else to do except enjoy family and friends. What an excellent opportunity to call on clients and offer to take them and their kids for a holiday lunch or breakfast. This is certainly not the time to pull out the financial plan, but after years of hearing prideful stories about the kids and grandkids it’s about time you got to meet them.
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