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How to succeed as a multigenerational advisor

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As the managing partner of Allied Financial Consultants, LLP, John Gibbons has been helping clients protect their standard of living while developing strategies for wealth accumulation and retirement income for over 35 years, giving him the opportunity to advise the different generations of families.

We spoke with Gibbons recently to get his ideas on multigenerational advising and to find out what advice he gives to advisors so they can make that a regular part of their practice.

LifeHealthPro: How do you define “multigenerational advisor?”

John Gibbons: One who, in their planning and work with a client, is focusing not only on the client’s current and future individual goals, but sees the bigger picture of the client in terms of how to not only accumulate, preserve, and distribute that client’s wealth, but how to also transfer that wealth into future generations in the most tax efficient manner. Today, most of our advising is not just financial advising but also tax planning and advising. Multigenerational advising is not just a look at the wealth, but how it transitions from one generation to another given the fact that certain types of wealth have a deferred tax liability. It looks beyond your client’s lifetime.

My practice is a holistic practice and includes both financial and tax planning. One without the other is not multigenerational.  

LHP: How has being a multigenerational advisor grown your business?

john gibbonsGibbons (photo, right): It’s grown our business because it made it easier for a lot of our clients to introduce their heirs, children, grandchildren to us early in the planning process, as they start to see the importance of planning for your future. Because of our emphasis on certain tax planning, we have clients who are trying to pass this information onto their heirs so they know how to handle the money they inherit. (An example of this is the stretch IRA and making sure the second generation understands how the money is to be used/distributed.)

This helps grow our business because the next generation is looking for consistency in their planning. It keeps current assets under our management.

We work with the next generation at a younger age. One of our employees/partners is a younger CFP and CLU. I tell the younger generation, 30 years from now, when they have serious planning and tax questions, they will want to seek the younger advisor’s advice, not mine.

This way, we keep the assets with us because they know they have someone to work with in the future. We also do this on the accounting side — we have a younger CPA. We practice what we preach. 

LHP: In working with different generations, you might talk to people ranging from their 20s to their 90s. In doing so, how does your message change? 

Gibbons: It changes a lot. The goals of the people in their 20s are totally different than those in their 90s and everyone in between. Our overall message is: “We are holistic planners.” A client’s goals and investor profile changes our recommendations. What type of investor are they? Aggressive or conservative?

But it goes beyond investment preference. Age matters too. Younger generations are in the wealth accumulation phase. Older generations are interested in planning their distributions. Our message stays consistent in focusing on tax planning, etc. But depending on the client’s goals and needs, our recommendations vary. There is no one recommendation, just like there is no one medicine. 

LHP: Do you use different marketing or forms of communication (i.e., face to face vs. mobile phone) in talking to them?

Gibbons: Great question. I just did an interview yesterday with two clients of mine who are in their 60s. We Skyped for the interview. I also have clients who live in Europe and all over the country; we do webinars, phone calls, Skype. Obviously, we also do face-to-face as well. We utilize all mediums but, in the end, we use the form that serves the client best.

Early on, as we establish our process with the client, it’s important we do face-to-face meetings. As we continue to work together this can evolve. It does not matter what their age is, we see it all. The client controls the approach. 

The main difference in age is that some of the younger clients want information as quick and fast as possible, so we use technology accordingly to meet this need. Client info is digitally stored so it can be easily shared with these younger generations. This allows us to communicate quicker with them.

LHP: How much do the products and planning change, say, from a grandparent who’s a client to their child or grandchild? Do you have an example of such a family you can discuss anecdotally?

Gibbons: One family I work with included a father who was a successful business owner. He recently passed away and his wife, who is in her 70s, is still alive. A couple of different trusts were set up and she is in a great financial situation. She doesn’t want to take very many risks at this point in her life. Her portfolio is conservative with low risk. She is more concerned with the transfer of the money to the younger generations rather than her income.

The children are in their early 40s, still in the wealth accumulation phase. Their portfolios and products have higher risk and more volatility than the mother. They also have needs to protect the business among siblings – including a business agreement. This middle generation also has children, who are just entering the work force. This youngest generation is obviously able to take even higher risk and volatility than the other two generations.  

Again, there is no universal solution, but this is the most common pattern that we see, with the oldest generation utilizing the most conservative investment options and the younger generations taking more risk.

LHP: How do you get your foot in the door with multigenerations? I mean: If you have a client who is 75, how do you then get in front of their children or grandchildren? Is this something you ask for directly? What’s the method?

Gibbons: If they are all going to be in town, we ask if we can host a luncheon so that we can get the entire family on the same page. Sometimes it’s even a conference call with all of the children, especially if the family is spread out and lives in different areas.

We ask them this: When do you think is an appropriate time to speak with your children about your long-term care needs. What is your longer-term care strategy and do your children understand what your wishes are? When should they learn about this? For some it is “yes,” while others say they want to get their children involved through trusts or they only want certain family members involved. A majority of the clients want at least some of their children involved. 

LHP: What’s the largest age range you have in a multigenerational family (i.e., 22-year-old to 94-year-old)?

Gibbons: Grandchildren: mid 40s; original couple (grandparents): mid 90s. There are also great-grandchildren within this family. They have 529 plans but are not actively making their own investments. These great-grandchildren range from 5-years-old to early 20s.

LHP: How much of your business is made up of multi-generation families?

Gibbons: 30 to 35 percent and growing. It’s a major part of our approach, and we are doing things to make it grow.

A lot of our “A” are “A” clients because they are multigenerational.

LHP: What advice can you give other advisors on growing into a multigenerational business?

Gibbons: The way to get more involved in multi-generation planning is to get more involved with your client’s goals and aspirations. As you bring in new clients, implement this type of questioning from the beginning:

- What do they want to happen to their wealth during and AFTER their lifetime?

- Can you help them with estate taxes?

- Should you introduce them to trusts?

The more you are focused on their long-term concerns, and less on just their wealth accumulation, the more you will become their trusted advisors. Focus on the transfers of money, their long-term care, etc.

For clients you’ve been working with for several years, here is how to approach the conversation: We have an annual review letter for every client. Through this letter, we invite clients to come in and review where their portfolios are and what needs to be updated/changed. 

When they come in, offer to ask these questions (goals for your money, longer term planning, children heirs, etc.) and let them know you want to address all of their concerns because so far you have primarily addressed their wealth accumulation. You can even let them know you are transitioning your practice into a holistic practice so you can help “the whole you.”