Advising the Next Affluent Generation

One of the bigger challenges facing financial advisors today is retaining the children and assets of their affluent clients. At first glance, it can be daunting. Unlike the family doctor or dentist who typically develops a professional relationship with the entire family over the years, most advisors haven’t had much contact with their clients’ children. When you factor into the equation the next generation’s use of technology and their ready access to information on the Internet, it’s easy to assume that advisors are going to be challenged retaining them.

Our research is clear; today’s affluent want their financial advisor to oversee their family’s financial affairs, which includes assisting them with their children’s financial needs. It’s during the teenage years that the children of affluent clients are ready to gain a basic understanding of finances. Let me share with you a common-sense example of how a thoughtful advisor has approached this issue quite successfully.

Jack is a second-career advisor who’s been in the field for 17 years. His initial objective was to help his affluent clients by meeting with their older children and giving them a basic understanding of money, investments, and the world of finance. This quickly evolved into a relationship built on trust and relevance.

After attending a team workshop and becoming immersed in our research on the affluent, Jack decided to incorporate a financial organizer—a simple repository where all their financial documents would be stored in an organized manner—into every affluent client relationship.

Since he had 45 affluent families, this was a major commitment and required a command performance on Jack’s part. He contacted each family, expressed the importance of having all of the family’s financial documents current, organized, and easily accessible. He then scheduled an appointment to be attended by both spouses to begin this process. That initial call was followed with an e-mail outlining all the documents they were to bring with them.

 During the meeting Jack explained that he was helping them create their family’s financial organizer. His commitment was to keep everything current, make certain all their financial affairs were linked, and then meet with their CPA to explain the process. It was during the second scheduled meeting that his clients, thinking out loud, wondered whether it would be a good idea for their 19-year-old daughter to be aware of their organizer. In overhearing their discussion, Jack offered to meet with their daughter and provide her with an overview of their financial organizer. This initiated a discussion that led to his clients opening an account for their daughter, gifting her a small amount of money, and assigning Jack to teach her the basics of investing. Every year they would gift another smaller sum.

His clients were extremely appreciative, and Jack was developing a good professional relationship with the older children of his affluent clientele, who now all had personal accounts with him. When meeting with these young adults Jack would walk them through their financial organizer and, depending on the client, either provide a cursory understanding of where things were and what was involved or go into more detail. He would also take them through their newly created gifted account and explain how he was going to help them learn the do’s and don’ts of investing.

For the children, the relevance was obvious; Jack had persuaded their parents to open an investment account in their name and was providing instruction on the fundamentals of investing. It was also made clear that if anything ever happened to Mom and Dad, all the family documents would be organized and in one place with Jack only a phone call away.

 This has strengthened his relationship with his current affluent clients to the extent that it’s having a direct impact on acquiring new clients. As Jack described it, “I’m amazed that working with the children is such a talking point. My clients now look for ways to introduce me, then sing my praises.”

Advising the next generation requires retaining the next generation—this is work, but as Jack will tell anyone who will listen, it pays off.