Helping Heirs: Strategies to Help Strengthen Relationships with Wealth Inheritors

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After Chelsea and her younger sister lost their mother a year ago following a stroke, the family’s financial advisors did more than just make recommendations regarding the roughly $3 million the two young women were set to inherit.

“They were very kind and went out of their way to help us,” said Chelsea, 30. They not only gave careful and patient explanations but showed true concern. Knowing Chelsea was overwhelmed by her mother’s death and caring for her newborn baby, they went to her house and “just hung out.”

According to Chelsea, largely because of their patience, thoughtfulness and willingness to listen, these advisors are still working with her and her family, an uncommon scenario according to the often‐cited statistic that 90 percent of today’s heirs don’t retain their parents’ advisors. [1] Like Chelsea, some of those heirs will be women, as $30 trillion in inter‐generational wealth changes hands over the next 40 years. [2] But unlike Chelsea, many heirs may not see a strong enough reason to stick with their parent’s advisor.

This may have nothing to do with an individual advisor or his or her performance, industry experts say: according to the report by global consulting firm Accenture “The ‘Greater’ Wealth Transfer: Capitalizing on the Intergenerational Shift in Wealth,” Millennials are less trusting of financial advisors than previous generations. [3]

“[In our experience], the kids don’t necessarily have bad feelings toward the advisor; they just don’t feel connected to him or her. And they don’t feel that they were treated as a partner in the decision making,” said Robert N. Grant of Grant & Gordon LLP, a law firm specializing in the transfer of wealth. “The person is almost always viewed as their parents’ advisor, and often they want to get their own advisor. That doesn’t always happen, but it can be part of establishing their independence, outside of the shadow of what are sometimes very successful parents with strong personalities.”

The good news is that losing the family’s business when a client passes away is not inevitable. There are practical strategies for retention that advisors may want to consider using both before and after a client’s death.

Not Your Parent’s Advisor

Establishing a relationship with the entire family and meeting with inheritors long before the principal client passes away may seem like a nobrainer, but there’s more to it than just including clients’ heirs in meetings. Heirs may need to feel their own connection to the advisor.

For example, Anne Rieder, managing director at VennWell, says her firm builds trust and establishes a connection with clients’ heirs by treating their personal financial planning as part of the clients’ package and fee. “We will offer to do a financial plan for those family members. Even if they’re in their twenties and just investing in a 401(k),” Rieder said. “We give them 2 the same level of service because we look at the family as the relationship, not just the person.”

There are also very real generational differences to consider, such as preferred methods of communication—email versus text, for example. Jane Williams, Chairman and co‐founder of Sand Hill Global Advisors, says her firm often assigns a younger, more compatible advisor to work with the heirs. “We really want to see advisors be able to relate to the next generation,” Williams said.

Grant agrees that this may be an effective way of getting around the difficulty of changing habits of older advisors. “If the investment advisor is relating to someone who has grown children, they will typically not be young themselves. And that ability to adjust to a younger generation requires skills that many traditional, older advisors don’t necessarily have or are unwilling to take on. Habits are difficult to break.”

Listen Up

So are personal styles. If you want a relationship to continue after the principal client passes, then you may want to consider the huge emotional component of inheriting money, especially with female clients. “Often female clients complain that the advisor would listen, but they felt like they were just listening enough to then be able to develop a plan,” said Kathleen Burns Kingsbury, author of How to Give Financial Advice to Women: Attracting and Retaining High‐Net‐Worth Female Clients. “Female clients want to be listened to in a way where they feel understood and cared for, and then they can make a plan.”

This may mean being patient, waiting until the person is ready to deal with the money, and remembering that along with inherited money most often there comes a set of complicated emotions.

“It can feel a little uncomfortable because it’s knotted up with the pain of loss,” Williams said. “A lot of our clients feel an awesome responsibility, not just a gift or sense of freedom, though it may bring those feelings as well. Some people even feel guilt when they get this money.” Chelsea certainly understands this. “It’s very hard to accept and use the money,” she said. “We grew up pretty well‐off, but my parents worked very hard for that money.”

Part of Chelsea’s inheritance from her parents—her father passed away before her mother—was placed in a trust that she and her sister don’t have full control over until they’re 35. Their parents’ financial advisor, now her advisor, is co‐executor, so Chelsea has to get the advisor’s approval before she can use the funds. This adds to the feelings of guilt, Chelsea said, even though she’s only taken money out of the trust for such practical things as starting a college fund and childcare for her baby. “It still feels strange to ask for it,” she said.

Indeed, the feelings around inheriting money may best be addressed early on, says Eleanor Blayney, the CFP® Boardʹs consumer advocate. “People don’t have these discussions with their elderly parents,” Blayney said. “They don’t want to because it seems like they’re just waiting to see what money they get. Sometimes the best role a financial planner can play is to facilitate these conversations. Get people around the table and take some of the 3 stigma out of the discussion of money between parents and kids.”

The Digital Connection

Of course, one advisor’s loss can be another’s gain when inheriting clients walk away from their parents’ wealth managers. According to Accenture’s “The Greater Wealth Transfer,” the most important traits to consider if you want to attract Millennials are their tendency to use social media for recommendations and to do their own research online before they contact you. [4]

Accenture suggests that advisors may want to consider developing an online presence built around educational material shared on your website, blog, and through various social media platforms. The report also suggests that advisors consider getting active on social media by sharing original content and other relevant information. [5]

“Having a strong online presence has always been a priority,” Rieder said. “This year, we refreshed our website and launched an online portal where clients may access their account information anytime, and we will be rolling out a mobile app in the first half of 2015. This is the kind of account access the next generation is looking for, and we are prepared.”

Key Takeaways

Based on the discussion above, here are some strategies advisors may want to consider to help retain clients through the generations:

  • Be sensitive about discussing finances with heirs immediately following the death of a loved one —take your cues from family members about when to bring up the issue of financial planning.
  • Treat the whole family as your client —make heirs feel like they are part of the plan.
  • Encourage discussions between parents and children on inheritance issues and feelings early —before a loved one passes away.
  • Try to pair heirs with advisors they can relate to: younger advisors may work well with younger heirs.
  • Craft an effective digital strategy to reach out to Millennials —who often prefer to conduct their financial business online.
  • Related Articles

  • Keeping It in the Family: Four Ways to Help Build Client Relationships Across Generations
  • Winning Younger Investors: Six Ways to Help Attract Gen-X and Gen-Y Clients

  • [1]HNW Wealth News, “X, Y, and #: Capitalizing on the Next Wealth Boom,” 2013.
    [2]Accenture, “The ‘Greater’ Wealth Transfer: Capitalizing on the Intergenerational Shift in Wealth,” 2012.
    [5]Ibid. For investment professional use only. Not for distribution to the public as sales material in any form.

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