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October 18, 2023 at 09:07 PM
Many financial advisors build their business through traditional methods — cold calling, relying on family and friends, seminars and networking.
Once they sign a client, good advisors will spend countless hours working to provide top-quality service while building assets. A fruitful relationship for a financial advisor can span decades yet disappear in days after a client passes. Trusts are a powerful way to address the issue.
Studies show that 90% of financial advisors will lose a client when the husband dies. Multiple clients passing in a short time frame can be catastrophic to an advisor’s career.
Common retention strategies inside the financial advisor community focus on actions to be taken after a client passes. As the statistics show, trying to establish a relationship with the next of kin can prove to be a fool’s errand.
The right way for financial advisors to ensure they maintain assets is by building emotional trust in order to recommend a financial or legal trust.
Assets held in a trust account are far less likely to be moved upon the death of a client by an heir. Trusts can allow assets to remain under an advisor’s management for the next generation, especially when a strong relationship has been developed with the trustee.
In many states, a well-drafted trust can direct that a financial advisor manage the trust assets. There are three key steps to introducing a trust and opening the door to client retention: timing, education and a trusted partner.
1. Timing the Conversation
Financial advisors freely discuss tax planning with their clients yet often shy away from discussing mortality.
Asset protection should be a key goal for any financial advisor, and that includes ensuring that the wealth being built is protected in the future. Consider discussing trusts at the client’s 10-year anniversary once a track record of success has been created.
