It’s a challenge for every advisor. You’ve fostered a client relationship over years, sometimes even decades, working with the client side by side to grow their portfolio—and grow your AUM. But when your client dies and the next generation takes over, you lose more than a valued client. You lose their portfolio as well.
What’s the answer? How can you retain those assets without having to prove your worth over and over again? The key to retaining next-gen clients is instilling a new level of relationship building across your business, and it begins long before the transfer of wealth actually takes place. Here are 6 tips to help you start building stronger, more valued relationships with your clients’ heirs today:
1. Talk to your client about where they want their assets to go—and why.
No one likes to talk about death. And yet, as an advisor, part of your job is to help create a thoughtful, tax-efficient plan for the transfer of wealth. The good news is that the conversation doesn’t need to be all doom and gloom. Open the conversation by asking what your client wants to do with their wealth after they die. Help them understand the dollar amount that is likely to be available as an inheritance, and then walk them through the process of choosing who will receive what portion of their wealth. Discuss the motivation behind each choice and identify the next-generation family members who will take control of the assets.
2. Review and discuss current beneficiaries.
Next, conduct a beneficiary review to be sure the beneficiaries listed are aligned with your client’s current wishes. Begin by ensuring that primary and secondary beneficiaries are listed for all assets—even those not under your management. Next, point out any discrepancies. Has your client talked about wanting to support her granddaughter’s education, but named only the girl’s parents as beneficiaries? Together, work to connect the dots between your client’s dreams of what her assets can do for others and how her beneficiaries are structured today.
3. Consolidate all assets.
Even if you’ve been working with a client for years, she may still have assets that you aren’t yet managing. If your beneficiary review uncovered additional assets, talk to her about the cost savings that come with streamlining the asset management process and the benefits of having one advisor managing the ‘big picture’ of her family’s wealth. Share how a fully coordinated approach can help ensure proper asset allocation and diversification, and how it minimizes risk by reducing overlap and overexposure.
4. Help select and guide an executor.
Now that you know who the heirs will be and their roles within the family, have a frank discussion with your client about naming an appropriate executor. Walk through what an executor does, the importance of the role, and the need for a trusted coach when the time comes. Once an executor is named, offer that trusted guidance from the start. Suggest a joint meeting to answer any questions, and assure the executor that you will be there to assist throughout the process. Most importantly, focus on building and fostering your relationship with the person who, ultimately, will decide who will manage the family wealth for the next generation.
5. Be sure assets are organized for structured distribution.
Next, work with your client and the executor to prepare the estate for tax-efficient distribution. Include the executor into the conversation as much as possible to continue to strengthen their trust in you moving forward. In some cases, it may be wise to expand the conversation to include non-executor beneficiaries. The more relationships you can build with the next generation, the much higher the potential that they will choose to keep inherited assets under your management in the future.
6. Revisit the estate plan every year.
Once the plan is solidly in place, don’t make the mistake of “setting and forgetting.” Not only may your client’s wishes change over time, but actively maintaining your connection with the executor and non-executor heirs can help ensure they choose to continue to work with you when the family wealth is transferred to their care.
While it’s easy to assume next-generation planning is only needed by older Baby Boomers, estate planning is important for every age group. Rather than concentrating only on your retired clients, consider creating a next-gen campaign that targets your “A” clients with the greatest assets under management. By focusing on client service, communication, and relationships across generations, you can help ensure your book of business remains in tact, even as assets are passed on to the next generation.
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