Multigenerational Financial Advising

Though financial advisors typically hope to build strong, lasting relationships with their clients, few advisors spend any time building relationships with their clients’ families. As a result of these lacking relationships, only two percent of children continue to use their parents’ financial advisors after inheriting from their parents. Additionally, only forty-five percent of wives continue to use their husbands’ financial advisors following their husbands’ deaths.

Interestingly, according to Sallie Krawcheck, president of Global Wealth and Investment Management for Bank of America, fifty percent of all wealthy individuals in America would gladly involve their families in their wealth-management discussions. These clients never mention this desire, however, because their advisors never make the suggestion.

The financial advisor is not the only one hurt by failing to create relationships with a client’s family. By not having a continuous communication with the decedent’s financial advisor, the family is put at risk of losing assets and family cohesion.

For advisors who decide to participate in multigenerational advising, the first step usually involves asking the client if he or she would like to involve his or her family. If the client answers in the affirmative, then the advisor should assemble a team of experts with a range of wealth-management specialties, including younger members to help the next generation feel comfortable.

Done well, a multigenerational approach can educate the heirs, give peace of mind to parents and efficiently transfer assets to the next generation.

For more information on multigenerational advising, see Michael Sisk, How to Keep the Kids, The Wall Street Journal, Jun. 4, 2011.

Special thank to Jim Hillhouse (WealthCounsel) for bringing this article to my attention.