The ClientWise Blog

How Successful Wealth Transfers are Built

Posted by Ray Sclafani on Nov 28, 2016 3:20:00 PM

Family and advisor

It’s a statistic you’ve all heard repeatedly and one that understandably sends a shudder through most firms: 90-95% of inheritors fire their parents’ advisor once the intergenerational wealth transfer has occurred. However, what’s far less frequently discussed, and directly related to both asset retention, is that upwards of 70% of wealth transfers ultimately fail. 

While the vast majority of advisors are keenly adept at managing money, executing estate planning documents and designing tax-efficient asset transfer strategies, a great many are falling short when it comes to financially preparing heirs and helping clients to impart family values to the next generation. Despite strong investment returns and carefully crafted estate plans, when wealth is transferred those plans are quickly falling apart due to a lack of family trust and communication.

Instead of approaching wealth transfer from a mindset of “how do I convince this future inheritor to stay with our firm” consider shifting your perspective to one of “how can I better serve my current clients by assisting them in preparing the next generation for the responsibilities that come with significant wealth?” Strive to be the conduit to resources and information for your clients, as well as the facilitator for inheritance conversations.

The Institute for Preparing Heirs®

In 2009, Diane Doolin (senior VP of the Doolin Group at Morgan Stanley and a highly successful Barron’s “Top 100 Women” financial advisor) formed The Institute for Preparing Heirs. The training company’s mission is to better help other advisors serve not just their clients but their clients’ families through a variety of tools and resources – from white papers and family conversation starter checklists, to marketing resources, webinars and training videos.

Doolin calls the inheritance conversation a key relationship builder for her practice and a demonstrable proof point of her good intentions towards her clients’ families – intentions that generate a tremendous amount of relationship good will and solidify her place as the family’s trusted advisor.

You've Been Framed Ray Sclafani The work being done by The Institute for Preparing Heirs and other intergenerational wealth transfer specialists should serve as a strong reminder that your fiduciary duty to your clients should extend not just beyond the point of your retirement (i.e. “The Big Fat Lie”) but also beyond the death of those clients by ensuring that the next generation is fully prepared for the opportunities and challenges ahead of them. And it all begins with having effective inheritance conversations – open, honest and frank discussions about their fears, concerns and hopes for imparting strong family values and a shared sense of purpose. 

Coaching Questions from this article:

  1. Think about your 10-20 largest clients. Beyond basic demographic information, just how much do you actually know about the future heirs of those clients and the family dynamics at work between various family members?

  2. What strategies will you and your team commit to in order to more effectively fill-in that information and begin to unearth key client concerns about the eventual transfer of their wealth?

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Topics: Client Engagement