You can't open a professional BUSINESS publication these days without hearing that we're approaching the greatest transfer of wealth in recent history, and that there are huge opportunities here for those in the wealth management business. With apologies to some leaders in the industry whom I admire, I think it will be a little more challenging for an advisor to collect those assets than simply waiting for them to show up via an ACAT transfer from children's accounts following their parents' demise. In fact, I think the greatest danger to today's wealth managers is that if they're not careful, what they will be doing is growing an asset management business for an advisor hired by the children of their late clients!
The greatest opportunity for the retention of that wealth as an advisor arises not from better management of the assets, but from providing the solution to the number-one issue facing Boomers and their parents: How do you care for aging parents without financially and emotionally destroying the family?
Here's the problem the Boomers face: They want to care about their parents but not necessarily for their parents. This is not because they are callous or indifferent; it's simply because logistically it becomes impossible for most of them. They often live hundreds--if not thousands--of miles away; they have busy, convoluted lives; their jobs don't allow time away to visit--much less care for--their parents, and even if all those things weren't true, they simply don't want the responsibility. Taking that responsibility from a global-care management approach is where the huge opportunity lies for today's wealth manager. In order to accomplish that task, you need to focus on the parents' problems with care and not just issues of wealth management.
The real dilemma is how to raise this issue with your older clients and their children without intimidating one or alienating the other. The introduction of this issue is far more delicate than the standard question of "Have you selected a nursing home yet?" In fact, that question alone is enough to get you disintermediated with the seniors and some very annoyed looks from their children.
As a 25-year veteran of the wealth management industry, I was forced to answer that question for myself when my father was diagnosed with Alzheimer's. Within a 24-hour period, I went from full-time son to full-time father--of my father. In less than 72 hours I was forced to relocate my dad, find a care center, get paperwork in order, and get him settled in the first of two centers that he would live in. I didn't know the language of care, didn't understand the issues to be dealt with, or have anyone to turn to who did. What I found was a hopeless and complex care system with myriad conflicting rules and a legal system that was more prohibitive than helpful.
What I really wanted as a child--and not an advisor--was to write a check to someone with a complete process that would remove all this responsibility from me and allow me to do what I really wanted to do, and that was to continue to be in a relationship with my father until he couldn't tell it was me anymore. After nearly four years of taking care of him on the weekends, endless visits during the week, and more bill paying and paperwork than I could ever imagine, I woke up one morning and had the following sequence of thoughts: "I think I'll walk the dogs. I'll have some cereal. I'll read the paper. And then...I'll shoot myself." At the time, the only thing I thought strange about those thoughts was that I really didn't like cereal; everything else made perfect sense.
What I was suffering from was the fatigue and exhaustion that come from living and working in two countries and four cities and having the full-time psychological, financial and care responsibility for an aging parent. It occurred to me that what I didn't need was a wealth manager. What I needed was someone to transform this situation from one that didn't work into one that did.
What we need is a Parent Care Specialist--someone who takes a global, integrative approach to the design, administration and strategic processes necessary to deal with an aging parent. Couple that idea with the trend toward data aggregation in the financial services industry, the increasing emphasis on fiduciary responsibility, and the twin devils of HIPAA and Privacy, and I believe you have the full job description for today's wealth manager. This service--which resembles what the ancient and forgotten Trust Officer used to do--is exactly what is needed to reduce the feelings of isolation, powerlessness and confusion that assault both Boomers and their parents in this situation.
Before any of this can take place, wealth managers need a new set of conversations--what we call The C.A.R.E. Conversations. Every parent is concerned about Challenges they face, the Alternatives that are available, the Resources that they can draw on and the Experience they would like to have. Using this guideline, technology allows them to design their future instead of default to one.
A wealth manager who does not see the opportunity in this situation is neither a good wealth manager nor a good opportunist. It solves a multitude of problems: The Baby Boomers have to deal with this and don't want to; the parents need to talk about this, but won't for about 6,000 separate reasons, and the advisor is fundamentally managing a sinking fund based on mortality tables. A wealth manager who chooses to do this will not only insure that the money lasts until the next generation, but insure that he or she gets to meet the next generation before the F7 key transfers the inheritance away.
What these clients want is the knowledge to think about their problems in a context that is meaningful to them. What they aren't interested in is why they make more money some days than others. In short, what they want is an advisor who is concerned about all of their problems--not just the ones they get paid for.
My sense is that there is a big, big future for providing what Dan Sullivan of the Strategic Coach (www.strategiccoach.com) calls Value Creation: providing leadership, relationship, and creativity inside a structure that is capable of evolving and changing as the needs of the clients change. Like his, my own experience tells us that people will pay for this without question, will value you more, and will connect with you and your firm in a way that provides employment security from one generation of partners in your business to the next.
Of course there's always the alternative: As a wealth manager, you could simply avoid this issue and run one more illustration using Monte Carlo software. If you do, file that illustration under "Greatest Hits," because your career is over.
Dan Taylor, J.D., is president of the Wealth Capital Group in Charlotte, N.C., author of The Parent Care Conversation: Six Strategies For Dealing With The Emotional And Financial Challenges of Aging Parents (Penguin 2006) and the creator of the Parent Care Solution, www.parentcaresolution.com.