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4 Ways to Retain Heirs

Ponder this worst-case scenario when it comes to introducing yourself to your client’s heirs: you’re at your client’s funeral and you offer both your condolences and a business card. The chances of those children and grandchildren calling you up after that are pretty slim.

Whatever you think of the younger generations—they’re lazy, entitled, glued to their phones—the fact remains that $24 trillion in wealth will transfer to them by 2030. They’ll need help. Introducing yourself to your clients’ heirs early and genuinely is the key to retaining that business.

Maria Quinn, adviser education specialist for Vanguard, told FPA Retreat attendees in April that there are ways to meaningfully engage with the adult children of your clients. First, Quinn advised, understand how the younger generations are different and how they perceive financial advice; second, fully engage both spouses; and last, authentically connect with the heirs of your clients.

In a 2015 Deloitte survey, 40 percent of boomers surveyed said their children work with a financial planner. Of that 19 percent said those children worked with a firm other than the ones the parents worked with and 21 percent worked with the existing firm.

Combined, Gen X and millennials (born between 1965 to 1997) are 141 million people. They’re different in the way they interact with financial planners. The acronym used to describe them is HENRY: high earner not ready yet. They will have wealth; they just don’t have it yet.

The younger generations are noted as the “401(k) generation,” Quinn said. They are saving automatically and don’t generally know where their money is invested. Both Gen X and millennials are socially conscious and express interest in learning more about retirement from their employer. Gen X tends to be distrustful of the financial advice industry while millennials see it as being too sales oriented.

But a smart move in reaching that next generation is to form a relationship with their mothers. Quinn said that many advisers tend to ignore the wife in client couples.

“She may be quiet in the room, but don’t think she doesn’t have opinions,” Quinn said. “She controls about 90 percent of the decisions. You want her in the room. You want to make sure you’re engaging her as much as you can.”

Some examples Quinn offered attendees to authentically connect with clients’ families were:

Do something special for your favorite clients. Quinn noted a planner who’d planned an 80th birthday party for his favorite client, pleasing her and impressing the family alike.

Offer pro-bono services for life events. Offer to do a financial plan for your clients’ children when you hear they are getting married or are expecting a baby. This could help forge a new client relationship and loyalty for years to come.

Pair up young advisers with young clients. Quinn said pairing up your clients’ children with your firm’s younger advisers would also be helpful. It would get that next-generation business in the door, while giving your next-generation advisers some valuable experience.

“Younger investors like to have a cultural similarity with the advisers that they’re working with,” Quinn said.

Be a savvy communicator. Quinn encourages planners to utilize technology to make a positive impression. She noted that the next generation of clients will do a Google search on you, and you want to be sure that what they find is appealing. Also, note that this generation probably doesn’t prefer phone calls, but rather emails and texts.

“If you do have clients whose children you want to make meaningful connections with,” Quinn said, “determine the most effective way to initiate engagement and establish a strategy for sustaining engagement.”

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Middle Child Syndrome: Seeking the Gen X Factor

Did you know Kurt Cobain would have turned 50 this year? The ‘90s are back in vogue with flannel button-downs, chokers and logo T-shirts trending once again. While the styles exemplifying the so-called Generation X are all the rage, this cohort between baby boomers and millennials is often forgotten in one critical area: wealth management.

When is the last time you had a conversation with these wealth builders in the middle? If you haven’t yet picked up the phone to call a boomer’s Gen-X beneficiaries, you may be missing a great opportunity to maintain a relationship once wealth has been transferred. And that wealth will certainly reach Gen X far before it reaches millennials.

Gen-Xers are already a captive audience for financial advice because many are well on their way toward saving for retirement. It’s worth noting that this is the first generation that can’t rely on a pension or defined benefit plan, and many instead opt to participate in their employer-sponsored retirement plan. They are also likely to be the first group without the fallback of Social Security if funds are tapped, as expected, by 2035, according to a June 2016 article on CNN Money.

This group is also already fluent in “adulting.” Often preferring a 9-to-5 job over a freelance economy gig, Gen-Xers’ steady income makes for sound long-term planning. They often have less debt to overcome than millennials, and with college and home ownership costing far more now than a generation ago, Gen-Xers consequentially have greater equity. They are also far less likely to crowdsource their next financial move, instead opting to pay a premium for quality service with a real person.

But it’s not too late to start engaging Gen X prospects. Here are some tips for knowing when and how to connect with this key demographic:

• Gen-Xers don’t want to be called only after a life event takes place. Including them in the conversation early on shows that you are interested in the long-term well-being of their family and helps foster trust.
• Advisers should consider a longer view by taking on the high-probability prospects that may not yet meet certain asset thresholds or those who have assets in a plan they cannot yet access. By offering fee-based services that may fit other immediate needs like financial planning or debt consolidation, advisers can focus on the prospect and not just the asset.
• Many Gen-Xers are starting families or already are thinking about the future of their growing children. These clients would benefit from working with an adviser on their own estate planning or saving for college, creating a multi-generational pipeline of prospects.

The opportunity is out there for the taking. But don’t take it for granted: Gen-Xers are also one of the first generations to heavily adopt technology and advisers may risk losing a client to a robo-adviser or other financial advice model if making that first call takes too long. It takes only one life event for assets to be transferred. Will you be the one they call?

To read more tips that can help engage Gen-Xers, visit our Wealth Management resources.

Matt Sommer


Matt Sommer
Vice President and Director, Retirement Strategy Group
Janus Capital Group
Denver, CO