Is this a time to be talking about an inter-generational financial planning proposition? Maybe it is… First of all during these restricted times, it’s a lot more difficult to get out and mix among prospective clients. Secondly now that you probably have a bit more time on your hands, there’s an opportunity to spend some time creating a new offering – reaching out to the children of your clients.
In the United States, it is estimated that children do not retain their parent’s adviser in 90% – 95% of cases after their parent’s death. This results in the adviser’s remuneration from that client going immediately to zero. Is the figure likely to be significantly different in Ireland? The good news is that there is a lot that you can do to build solid relationships with the adult children of your clients.
First of all, it’s worth considering some ways in which you can get on the radar of adult children and then remain there.
Get to know the adult children
First of all, make sure that your client’s children know who you are. Seek permission from your client to introduce yourself to them – not to hound them for business, but instead that their children have a recognised and friendly face in the event of the death or loss of mental capacity of the parent. Should this happen, at least now you are a friendly face who has some chance of working collaboratively with the children into the future.
Look for opportunities to demonstrate your value
Then when you are introduced to your client’s children, take the relationship very slowly. Look to add value by adding them to your ongoing communications networks, after first of all finding out which communication channels they want you to use. Depending on their preferences, look to add them to your email newsletter, connect with them on LinkedIn, follow them on Twitter etc. If you are hosting a relevant seminar, you should even consider suggesting to your clients that they bring one of their adult children along to it.
Include them (as appropriate) in their parent’s financial plans
This is obviously an area in which you need to tread carefully, but there may well be areas of a parent’s financial planning in which it makes sense to involve their adult children. While parents may not want to share every small detail of their financial situation with their children, some planning will make lives easier down the road. At a minimum, seek to ensure your clients and their adult children understand the structure and implications of wills, enduring powers of attorney, gifting strategies and estate planning.
At the end of the day, you want the opportunity to demonstrate to the adult children of your clients that you really care about your clients, that their interests are paramount in everything that you do. They will see you a valuable, trusted adviser to their parents. And they will also hopefully see that you can carry out the same role for them too.
It is then worth turning your attention to considering some of the specific ways in which you might treat this younger cohort, in order for them to fully engage with you and to become long-term clients.
Have a proposition that “talks” to them
If your proposition is all about managing assets, this is not going to resonate with these younger clients – because they often don’t have any! However what they do probably have is significant income growth potential and the ability to build an asset pool in the future. Build a proposition and pricing structure that talks to them about their goals and needs, rather than that of more traditional, older clients.
Lifestyle planning is relevant
Yes, younger people usually have less assets. However younger people tend to have heads full of future dreams, goals and ambitions, more so than older people where life has become a little more settled and simple. Younger people have no sense though of how achievable their dreams are, or what they need to do to bring them to reality. That’s where your skills as a lifestyle financial planner come in.
Send them targeted communications
Sending “one size fits all” communications to your younger clients that you use to engage your clients in their 50’s and 60’s just won’t wash – your younger clients won’t be able to relate to it. You will need to alter your communication approach with your younger clients, by developing separate content that connects with them and their specific challenges at their stage in life. It’s definitely more effort, but worth it in the long run.
Are you the right adviser for them?
The client bases of most financial planners tend to generally reflect the adviser in terms of age and other demographics. Potential clients tend to gravitate to people that they can easily connect with, who appear to be “like them”. This is something you need to carefully consider with younger clients. If you’re 20+ years older than your target younger clients, are they really going to connect with you? Or will they feel more comfortable with a younger adviser who they can easily relate to, and who will be with them over their full financial journey. Is it time to go out and hire a younger adviser, if you are really serious about expanding your client base among younger clients?
How will you charge?
This is a significant headache for advisers… how to make this segment viable, particularly as asset levels are low or non-existent. A trail commission basis probably won’t work for you, and these clients may well baulk at / not see sufficient value in a standard retainer or fee arrangement. So you may need to review your proposition to a “lite” version at a lower cost, with a view to increasing the services and your fees as the years progress. This is a tough one to get right, but can be achieved with careful planning and execution.
Building bridges to the next generation is a significant challenge, both in terms of attracting them and then delivering a proposition that engages them. However if you do this well, it will add significant long term value to your business. Maybe developing an inter-generational proposition is a really good use of your time over the coming months?