To maintain the business of a multigenerational family, advisors need to offer thorough and thoughtful estate planning that
Yet many wealth management firms lack a comprehensive wealth transfer strategy to offer those clients, according to new research by Financial Planning's parent company Arizent.
Arizent's report this week, "
That means over four in 10 respondents did not offer systematic planning for the eventual home of clients' assets, despite the ongoing wave of
"Many advisors are used to serving an older client base and are concerned about
However, "older clients will eventually pass away and need to be replaced with other clients for the business to continue," the report said. Hiring younger talent that can relate to those heirs can help address such concerns. That could also secure the future of the advisors' own businesses — since young talent could later be groomed to take over the business when current owners retire.
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All the bells and whistles
So what does a successful wealth transfer plan look like? Arizent identified several core service areas that advisors who do offer such plans tend to have. These include "estate planning, tax strategies ...
Firms with such plans also often increase their presence on social media to better relate to younger potential clients — something that most respondents overall, though, said they did not do. "Social media is where many younger generations can be reached, and more importantly, educated on the need for sound financial advice," the report said.
Specifically, family meeting facilitation is an important service and can have many components. Advisors could host "entire family" events once or twice a year, encourage clients to invite younger children in the family to "relevant client meetings," the report said, and offer discounted fees to clients' children or grandchildren.
And more importantly, advisors need to become comfortable with navigating, even mediating, difficult family conversations at those meetings as a trusted outsider.
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The heart of the matter
"Overcoming the more emotional aspects of planning remains central to success" when it comes to wealth transfer planning, said Chayce Horton, a research analyst on Cerulli Associates' wealth management team.
The best way for high net worth families to proceed with these conversations is through family meetings and "facilitating regular communication," Horton said, citing recent research by Cerulli on high net worth estate planning practices.
"Almost all families, and especially those with significant wealth,
To ease into such meetings, advisors could help families formulate a shared family mission statement, Horton said, or guide them in an activity such as "inclusive charitable planning" that helps family members "aggregate and codify values and a sense of purpose."
For Amy Castoro, the president and CEO of high net worth estate planning firm The Williams Group
"The more families we can get talking about their wealth, the better off their relationships are going to be," Castoro said.
"And what we've learned is that when families stay together, their philanthropy can change the world."