10 Steps to Becoming a Multigenerational Advisor: Pershing

Failure to engage entire family risks missing big opportunity in coming decades

“The longer you wait to form relationships with the next generation," Dellarocca warns, "the greater your risk of losing those assets when the wealth changes hands.” “The longer you wait to form relationships with the next generation," Dellarocca warns, "the greater your risk of losing those assets when the wealth changes hands.”

Advisors who are not engaging their clients in a wealth-transfer conversation may be taking needless risks and missing promising opportunities, according to a study released by Pershing this week.

The study, which examined some 1,200 investors across the country, found that only 35% of survey participants said their advisor provided a service that helped them manage and transfer wealth across generations.

Pershing noted that an estimated $12 trillion in financial and nonfinancial assets was currently changing hands, and another $30 trillion would be transferred by midcentury.

To take advantage of this enormous opportunity, Pershing said, advisors need to ensure that the family group is at the forefront of a practice rather than just the primary account holders.

According to the study, only 17% of clients with children reported that their adult children worked with their primary advisor, and a mere 3% of clients said their advisor had asked to meet with their children.

Forty-one percent of investors said they had asked their advisor to meet with their children.

Pershing said the findings suggested that clients were not pushing to involve their families in the wealth-transfer conversation, but that it was also apparent advisors were not leading the way.

Many advisors wait until the moment of transfer when it is “simply too late” to engage the children or heirs of their clients, Kim Dellarocca, global head of segment marketing and practice management at Pershing, said in a statement.

“Chances are your clients’ children and heirs will have formed relationships with other advisors by the time your clients are 65,” Dellarocca said. “The longer you wait to form relationships with the next generation, the greater your risk of losing those assets when the wealth changes hands.”

What Advisors Can Do

Pershing outlined 10 steps advisors can take to build a multigenerational practice:

  • Assess what assets will be at risk when a client's wealth is transferred.
  • Expand your definition of “client” from individual, through household, to family.
  • Tailor your service offering to meeting the needs of a family, rather than an individual.
  • Engage spouses and children, or other heirs in cases where clients do not have children, in your process.
  • Include women on your team and younger members who can engage with the next generation. (Panelists at the recent Securities Industry and Financial Markets Association private wealth conference stressed the importance of a mixed team in engaging younger clients.)
  • If you don’t have the capabilities in-house, develop professional relationships to help your clients with complex needs of wills, trusts, and tax and estate planning.
  • Become aware of the complexities associated with tax, trust and estate planning to help guide your clients.
  • Ensure your educational and social activities appeal to families and that they encourage discussion between couples and across generations.
  • Learn whether you’re forging strong relationships with all members of the family group by soliciting client feedback. If you aren’t, you can adjust accordingly.
  • Take the lead. Don’t wait for your clients to ask for direction on wealth-transfer issues.
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