By Jonathan Bernstein, CIMA, Stringer Asset Management
According to research conducted by Cerrulli Associates in 2014, the average age of a financial advisor is 50.9 years old and 43% are 55 or older. That is certainly an interesting statistic and it may provide some insight into why the industry has not replaced itself with the next generation of financial advisors. What may be even more interesting is that a PriceMetrix Inc. report in 2015 found the average client age is 62, and that average age will reach 70 in a few years if advisers do not start incorporating more young clients into the mix.
SKATE TO WHERE THE PUCK IS GOING
With seasoned advisors and clients, we know that wealth will eventually be transitioned to the next generation. The estimates of intergenerational wealth transfer vary depending on the time frame, but everyone agrees that the number is huge. We have seen some estimates that during the next 15 years, more than $25 trillion in financial assets will pass from the Baby Boomers to their Generation X and Millennial children. Navigating this transition is critical to the continued success of financial professionals, and the first step is to get to know those people that will inherit the assets.
With each holiday season, we hear many advisors say that business gets slow from Thanksgiving through the New Year. However, this period is often the best opportunity an advisor will have all year to meet the children and families of their clients. It’s a chance to make that emotional connection between the plan and the people who served as motivation for the plan in the first place. If that is not reason enough, consider that there is a very important business reason to make the effort as well.
THEN GATHER AT THE TABLE
We have found many advisors are simply not doing what is necessary to get to know the next generation. Some estimates suggest as many as 98% of children inheriting assets leave their parent’s financial advisor. All the work advisors are doing to help clients plan their entire financial lives may simply end with the death of the primary client. Many primary clients do not want that and neither do their advisors, however, when there is no relationship with the kids, that is what happens more often than not. Advisors will be greatly served by using the holiday season as a way to get know people in times of warmth and celebration.
Family and friends tend to congregate at the family home during this time of year. Clients get to see their children and grandchildren, and relatives come in from out of town. This is a great opportunity for advisors to call on their clients and offer to take them and their kids for a holiday lunch. After years of hearing stories about the kids and grandkids, it’s about time we get to meet them.
There is no rule that states successful parents have successful kids, but they do tend have the wherewithal to pay for school and in many cases put a high premium on education and hard work. Why not meet these folks? They look a lot like their parents in terms of values and, perhaps, eventually wealth.
Jonathan Bernstein is a co-founder of Stringer Asset Management and serves as the Director of Sales & Marketing at Stringer Asset Management, a participant in the ETF Strategist Channel.
DISCLOSURES
Any forecasts, figures, opinions or investment techniques and strategies explained are Stringer Asset Management, LLC’s as of the date of publication. They are considered to be accurate at the time of writing, but no warranty of accuracy is given and no liability in respect to error or omission is accepted. They are subject to change without reference or notification. The views contained herein are not be taken as an advice or a recommendation to buy or sell any investment and the material should not be relied upon as containing sufficient information to support an investment decision. It should be noted that the value of investments and the income from them may fluctuate in accordance with market conditions and taxation agreements and investors may not get back the full amount invested.
Past performance and yield may not be a reliable guide to future performance. Current performance may be higher or lower than the performance quoted.
The securities identified and described may not represent all of the securities purchased, sold or recommended for client accounts. The reader should not assume that an investment in the securities identified was or will be profitable.
Data is provided by various sources and prepared by Stringer Asset Management, LLC and has not been verified or audited by an independent accountant.