Is the average age of the clients in your book of business 65? Are you confident that all of your assets under management will remain in your hands when your older clients die? Are you willing to bet your business on it?
Successful financial advisors (FAs) are always looking for net new assets. But what happens when high-net-worth clients pass the reins to a younger successor? More often than not, the successor will find a new advisor, reducing the FA’s assets under management.
You don’t want this to happen to you! And fortunately, it doesn’t have to — you just need to learn how to retain your assets across multiple generations.
You already know how to create deep relationships with your mature, established clients; that’s what makes you a high-producing FA. Now I’m going to show you how to create deep and meaningful client relationships with the younger generations, too. This will allow you to maintain your assets as they are transmitted throughout the generations of a high-net-worth family.
It’s All About Relationships
I recently spoke at a lunch for high-producing financial advisors in Philadelphia. During my program, I noticed that one man — let’s call him Phil — was nervously smoothing his tie whenever I talked about cross-generational selling strategies. When I asked him what was wrong, he told me that he had just lost a $5 million account. Phil had been working with this client, a successful doctor, for years; unfortunately, the doctor died unexpectedly.
Phil went to the funeral and gave his condolences to the doctor’s wife and grown children, assuming that business would go on as usual. Within a few weeks, though, he was told that the client’s son was moving the account to a competing advisor.
“I never saw it coming,” Phil said, shaking his head woefully. “I wish I had taken the time to create a succession plan with my client years ago.”
Just Who Are these Generations?
To create deep and lasting relationships, it’s important to understand what shaped the general identity of each generation. We all know there are different “generations,” but it’s especially important to identify the three groups that dominate today’s workplace. According to demographers, they are:
- Baby Boomers — born between 1946 and 1964, this group is 82 million strong
- Generation X — a smaller group of just 59 million, they have a laser-focus on results and benefits
- Generation Y (or The Millennials) — A sizeable cohort of 80 million, these are the under-30s who hold the key to how we’ll live and work tomorrow
Each of these generations was shaped by the unique political, technological and societal events that occurred during their formative years. For instance, Baby Boomers experienced the Vietnam War, the Civil Rights and women’s equality movements, and the moon landing. Generation X’s formative years saw the fallout of Watergate, record-level divorce rates (which turned many Gen Xers into latchkey kids), the advent of MTV and the Challenger explosion. Generation Y has never known a time when they weren’t in some way “wired,” and grew up with the Internet, video games and cell phones, and are used to having a voice in family decisions. Consequently, each generation has its own values, personality, language and buying habits.
Not surprisingly, each generation also has its own idea of “the perfect financial advisor,” and its own goals and expectations for that relationship.
How Could this Information Have Helped Phil?
We can’t know how Phil’s doctor client would have reacted to the idea of succession planning. (After all, even doctors can be squeamish about facing up to their own morality.) But we do know that by discussing the future and creating a multi-generational dialogue Phil would have stood a much better chance of retaining this account when his client died.
Here are four tips to help you create succession plans that will keep your clients’ assets in-house across several generations:
1. Do Your Homework
First, identify your client’s generation. He or she may be a Baby Boomer, or a “Traditionalist” who fought in World War II.
Now you must learn who the successor is and to which generation they belong: Are they from nose-to-the-grindstone Gen X, or from environmentally conscious Gen Y? Are they a legacy-oriented Boomer, or a conserving Traditionalist? (Avoid just asking how old someone is; instead, you can usually figure out to which generation they belong by asking subtle questions about their childhood, where they went to college, when they graduated, etc.)
The answer will give you a surprising level of insight into their priorities.
Related posts:
Pages: 1 2
