Connecting with the Client’s Next of Kin

Over the next 25 years, an estimated $68 trillion is expected to pass from the Baby Boomer generation to their millennial heirs (according to research by Cerulli Associates). While this may be a signal of healthy activity for the financial advisory industry, unprepared advisors could be in big trouble if they are not mindful of one key ingredient: retaining their clients’ heirs!

The relationships they’ve built with their clients are not necessarily going to translate over to their families, and therefore it’s critical that advisors begin building the foundations for these relationships now. Meeting the widows and children at the hospital bed or the funeral is likely to be too late to build a meaningful connection (and be perceived as crass and opportunistic). Studies have shown that a mere <7% of assets are retained with the same advisors through trans-generational migration; a staggering 66% to 95% of children fire their parent’s advisors after inheritance.

The shocking drop in advisor retention implies a poor lack of relationship development between advisors and their client’s next of kin. This means that client retention ultimately boils down to relationship management.

Depending on who the next of kin is, there are a number of ways in which advisors can engage their client’s families and try to improve upon this percentage:

Education and Engagement

Typically, the spouse is the most direct beneficiary of inheritances. Very often, decision-making power in relationships is not equally shared, and when the key decision-maker passes away, the surviving spouse is left unprepared to shoulder the financial burden.

To combat this, it may be useful to ask your clients to start reviewing financial correspondence together. Taking this first step may go a long way in helping the client’s spouse familiarize themselves with their financials, and once this has become routine, advisors should encourage couples to begin meeting with their advisory teams at least on a yearly basis to make sure all parties are on the same page.

Lastly, encouraging couples to regularly update not only their wills but also their personal goals and wishes, may go a long way to keeping surviving spouses in sight of the intentions of the recently departed.

Preparing for death is never a pleasant task, but by taking these preemptive steps, advisors will ultimately be better equipped to guide their client’s surviving spouses through the ordeal while simultaneously building a strong foundation of trust.

Small Gestures Can Go A Long Way

In some cases, a client’s wealth may pass directly to his/her children. While today’s generation is likely worlds apart from that of the Baby Boomers, it all begins with starting simple!

Most people carry a number of small memories from their formative years with them throughout their adult lives. Think of the teddy bear you were inseparable from as a child, the cookies your neighbors used to bake for you during the holidays, or the first watch you were gifted as a teen. While these may all intrinsically be items of little value, their significance is the nostalgic/sentimental footprint they leave in your mind. While there may be no direct correlation to business retention here, by similarly making small, thoughtful gestures to your client’s children, advisors can at least open the door for future dialogues down the road once that child has grown up and is ready to seek financial advice.

Communication in the 21st Century

Let’s say that the client’s children have come of age and are ready to seek advice. The advisor should just pick up the phone and start calling them, or request face-to-face meetings, right?

Not so fast.

In an age where information is instantly accessible and abundant, and attention spans are shorter, people nowadays naturally consume and digest information much differently than those of previous generations, and lengthy phone conversations or in-person meetings may be less effective in engaging today’s millennial clients as more of a premium is placed on convenience and expediency than ever before. In lieu of these traditional forms of communication, advisors today might instead try weekly summary emails tailored to the targeted client’s circumstances, or opt for video-conferences over in-person meetings.

Experience-Based Marketing

Given that so much of today’s generation’s attention spans are dominated by social media, advisors may also consider the fact that a person’s social media presence is a portal to other prospective clients. To that extent, an advisor’s outreach may be expanded significantly by hosting networking or educational workshops such as “Wine Wednesdays” or other similarly entertaining events. Assuming they are well received, advisors may benefit greatly from word of mouth via social media.

While results from these proactive approaches are still pending, the bottom line is that advisors cannot be passive if they wish to hold onto their business.