family having a picnic outdoors

No matter where you are in your professional journey as a financial advisor, gaining new assets is probably a key strategic priority. If you are building your practice, you need new assets to help lay a strong, stable foundation. And if you are managing a successful business, you need new assets to replace what your clients may be spending down in retirement or transferring at estate settlement.

Generally, this means you have two choices: promoting growth opportunities with existing clients or going out and acquiring brand new clients. Both of these options may require time and effort. But there is a practical third choice—a hybrid approach—that may be more efficient and productive: expanding your assets under management by converting the adult children and extended family members of existing clients to new clients.

Here’s why you should focus on this approach. You are already familiar with your clients’ financial goals for their families. Leaving a financial legacy for their children and grandchildren may be a high priority for your clients. You might not be working with the next generation(s) of your clients’ families yet. And a significant number of your clients actually want to introduce you to their children/grandchildren, and are simply waiting for the chance.

What the numbers say

It can be a straightforward formula for success. According to a recent RBC Wealth Management client survey, ensuring a smooth transfer of wealth to children/heirs is a top ranked client concern.

  • 75% of survey respondents reported they are concerned about their wealth transfer.
  • 72% indicated their children are not working with their financial advisor.
  • 31% said they would be happy to introduce their financial advisor to family members.

As a corollary to the second bullet, above, if you were to work with one quarter of your clients’ adult children, that means three-quarters of your book of business may be at risk of “walking out the door” when your clients’ children receive their inheritances. Clearly, it may be a good policy to establish relationships with adult children of your most valued clients now to help manage future asset attrition risk.

With such strong reasons why to take action, here are three “how-to” ideas to explore.

1. Invite your clients’ family to client events

You may host client appreciation events to help maintain deep personal relationships with your top clients. During the summer months, this might include picnics, wine tastings, golf or boat outings and so on. During the holidays you may throw parties. And throughout the rest of the year you may attend sporting events, concerts, plays and other cultural activities together.

Plus, you may organize special events to build stronger professional relationships with your “opportunity” clients. This may include presentations on wealth management topics, financial workshops and the like.

A great way to show your value as a financial advisor to both of these client segments is to invite their spouses and children to participate. In addition to helping you achieve business objectives with existing clients, inviting their family makes sense because they may be desirable prospective clients.

From a tactical standpoint, the event provides a natural, comfortable and low risk setting for an introduction. It also serves as a conventional and expected venue for you to ask a few simple questions to learn about their interests and circumstances.

After the event, you have a valid reason to follow up with your client’s family members. This could be as simple as asking them if you could send them a newsletter or other financial information from time to time. Or it could mean offering them a complimentary consultation.

For your most valued clients, you may consider asking them if they would care to have their spouse and adult children attend quarterly or annual portfolio reviews or other meetings, now that they have been introduced to you. Having the entire family present may help facilitate conversations about estate planning and other important financial goals.

How to take action

To help you identify your top clients and opportunity clients, RBC Correspondent Services offers tools to help you segment your clients by level of importance to your business as well as resources to help you define the level of service each segment can expect to receive. And once you have made a connection with your client’s adult family members, you can customize our turnkey marketing materials and newsletters with your name and contact information to provide useful financial information as you stay in touch during the prospecting process.

A customized “family inventory” work book can be provided to help clients and their family document important personal, financial and medical information to keep in one place. An up-to-date inventory will prove invaluable to surviving heirs, executors, trustees and advisors in the settlement of the estate after a client passes away. As they fill out and maintain the inventory, they know they can always contact you for wealth management advice.

2. Show the next generation you understand their priorities

In 2018, RBC Wealth Management commissioned The Economist Intelligence Unit to survey high net worth individuals worldwide about their legacy planning needs. The result was The new face of wealth and legacy.1 Among its many findings are differences based on age and gender.

Generationally, there are significant differences when it comes to definitions of wealth and life goals:

  • Seventy-eight percent of Millennials expect to make more of an impact on the world with their wealth than prior generations, compared to 56 percent of Baby Boomers.
  • Globally, Millennials distinguish their legacy goals from their parents’ goals more often than Boomers, with 81 percent of Millennial men and 69 percent of women citing different goals from their parents, compared with 58 percent of both Boomer men and women.

Americans born after 1965 are socially conscious and are eager to make an impact:

  • Two-thirds (67 percent) of Americans age 54 and younger feel a personal responsibility to use their wealth to benefit broader society, compared to 39 percent of their older peers.
  • They seek to align their legacy and charitable giving—as well as their day-to-day spending—with their social goals.

Women are staunch advocates of having a social impact:

  • Two-thirds believe they will have the opportunity to tackle societal issues through impact investing, compared with 56 percent of men.
  • Sixty-five percent of Millennial women say they have a personal responsibility to use their wealth to benefit broader society, compared with 52 percent of women from previous generations.
How to take action

To learn more about engaging each generation, review Creating Connections, an online guide for financial advisors developed by RBC Correspondent Services.2 It provides insights and best practices for working with the Silent Generation (born 1925-1945), Baby Boomers (born 1946-1964), Generation X (born 1965-1980), Millennials (born 1981-1997) and Generation Z (born after 1998).3-7

Your Baby Boomer clients may want you invite their children into the wealth transfer conversation early. They also appreciate your giving their kids a financial education via informal meetings or casual conversations.

The Generation X adult children of clients may ask a lot of questions and disengage when feeling “sold to.” Position yourself as a resource and tone down formality to connect with them. Once you build trust with this generation, you may have them for life.

Regarding the Millennial adult children of clients, begin with the fundamentals. Think of a financial basics booklet or an informal question and answer session. After your initial meeting, customize the client experience. Focus on their future and understand how their generation lives.

For your clients of any age or gender who wish to make an impact with their financial decisions, you may want to offer our responsible investing thought leadership materials and educational resources. A selection of responsible investing products and accounts is available to help your clients accomplish their financial goals in a manner consistent with their deeply held values.

(We define responsible investing as any approach that includes desired management practices and operational outcomes along with capital appreciation or income potential in the security selection process. The methods may vary, but the common element in responsible investing is the consideration of factors beyond traditional fundamental and valuation metrics.)

3. Talk to college age children of clients about financial literacy

The youngest of your clients’ adult children are in their early- to mid-20s, and at a point in life where they may not have much money yet. But they still have a compelling need for ongoing financial advice in terms of experiences to help them become financially literate.

They need to learn about budgeting, cash flow, paying taxes and how to manage credit responsibly. Once they have those concepts down, they need to learn the basics of investing, planning for their retirement and protecting themselves from financial pitfalls or setbacks. And throughout the early years of their careers, they may have questions about evaluating job offers, managing student loan debt and the financial aspects of major life milestones, such as getting married or starting a family of their own.

As a financial professional, you deal with these financial literacy topics every day, making you an ideal candidate for the job of educating your client’s children. The time you spend with them may not pay off immediately. But if your business includes helping your clients’ youngest adult children develop good money habits, this strategy may be an investment that pays dividends down the road.

How to take action

RBC Correspondent Services provides access to a wide range of financial literacy educational resources. They are available at no cost to you and can be customized with your name and contact information for future reference.

Showing your clients and their loved ones that you care about their financial well-being—both as a family unit and as individuals from one generation to the next—can be a practical way to acquire new assets and keep client assets in your book of business to manage for the long term.

  1. The new face or wealth and legacy. Retrieved from https://www.rbcwealthmanagement.com/_global/static/documents/insights/EIU-Creating-social-value-now.pdf
  2. RBC Correspondent Services Creating Connections webpage. Retrieved from http://www.rbccorrespondentservices.com/cmp/generational-report/
  3. RBC Correspondent Services Creating Connections webpage. Retrieved from http://www.rbccorrespondentservices.com/cmp/generational-report/the-silent-generation
  4. RBC Correspondent Services Creating Connections webpage. Retrieved from http://www.rbccorrespondentservices.com/cmp/generational-report/baby-boomers
  5. RBC Correspondent Services Creating Connections webpage. Retrieved from http://www.rbccorrespondentservices.com/cmp/generational-report/generation-x
  6. RBC Correspondent Services Creating Connections webpage. Retrieved from http://www.rbccorrespondentservices.com/cmp/generational-report/millennials
  7. RBC Correspondent Services Creating Connections webpage. Retrieved from http://www.rbccorrespondentservices.com/cmp/generational-report/generation-z-tomorrows-investors