Advisors can benefit during intergenerational wealth transfers if they play the long game
We love our own kids, but others’ offspring can be entirely different story, especially in a professional work environment.
But research conducted by investment manager Nuveen provides a compelling case for advisors to demonstrate their child-friendly credentials – as it could be good for business.
The study into ‘wealth inheritors’ has found that advisors can benefit more from intergenerational wealth transfer if trust has been long-established with clients’ heirs.
It found that 80% of the wealth inheritors who first met the advisor as a child or teen decided to work with them as an adult, compared with 54% of those who first met the advisor as an adult or young adult.
Jeff Carlin, global head of Wealth Advisory Services at Nuveen, says that it’s not a given that heirs will decide to move to a new advisor when they inherit wealth.
“Our research shows that advisors can continue their role and work with the next generation if they take intentional, specific steps to establish a relationship with a prospective heir before the money is passed down,” he said.
But while some advisors may struggle to connect with children and teens, Carlin believes there are some subtle things that can work.
"Advisors should look for such opportunities – for example, by including younger generations in social events -- and take time to understand their interests to better form a genuine connection,” he added.
FAs top for advice
The study revealed that FAs are the top choice of wealth inheritors for advice and education (65%), but many also rely on family or friends (60%), online research or trading sources (53%) and personal finance news (44%). Only 19% rely on robo-advice.
"Advisors should position themselves as advice orchestrators, overseeing the client's overall wealth and planning, and coordinating the efforts of other specialists," said Joy Crenshaw, head of Global Sales & Advisor Development at Nuveen. "We believe advisors can create a multi-generational pipeline of clients that can help fuel their practice growth."
Crenshaw added that this approach can be a valuable source of business development.
"By understanding what wealth inheritors want and structuring their service accordingly, advisors can capture their share of a multi-trillion-dollar asset opportunity,” she concluded.
