Subscribe
Share
Share
Embed
Hosted by Financial Advisor Coach, Ray Sclafani, "Building The Billion Dollar Business" is the ultimate podcast for financial advisors seeking to elevate their practice. Each episode features deep dives into actionable advice and exclusive interviews with top professionals in the financial services industry. Tune in to unlock your potential and build a successful, enduring financial advisory practice.
Ray Sclafani (00:00.366)
Welcome to Building the Billion Dollar Business, the podcast where we dive deep into the strategies, insights, and stories behind the world's most successful financial advisors and introduce content and actionable ideas to fuel your growth. Together, we'll unlock the methods, tactics, and mindset shifts that set the top 1 % apart from the rest. I'm Ray Schlaffani, and I'll be your host.
Well, hold on now. Today's episode is about strategies to stem the outflow of assets as they transition to the next generation. I know what you're thinking, Ray, that's not my firm. Believe it or not, most advisors will indeed lose out when wealth passes down to the next generation. So even if this isn't about your firm, think about your competition. Less than 20 % of those assets stay with the same advisor after the transfer. Why?
because too many advisors fail to connect with their clients' heirs, missing the opportunity to serve the family multi-generationally. Today, I want to bridge that gap, help you think about building genuine connections with the next generation and locking in that legacy. If anything, you've identified a prospective client in your marketplace that you want to attract and acquire as a client, these tips will help you there as well. The bottom line is that if you genuinely want to keep
assets under management or attract the next generation as a client, you must adopt a more strategic approach to building connections with future inheritors and start long before wealth transitions. Here's some recent data. Out of MFS, the investment management survey they conducted, 75 % of wealthy investors say that their advisor has never sat down and met with their clients' adult children. Cerulli Associates reports only 60 % of practices
have a relationship with a client spouse, with fewer than half, only 45% having any relationship with their client's adult children. Considering that spouses are generally the first stop on the wealth transfer journey, the importance of building intergenerational family relationships that engage all members should always start with the spouse, if they're not already an active participant in financial decision making, but reaching out and building connections and trust with the next generation,
Ray Sclafani (02:22.816)
is just not something you can put off any longer. It's important to understand, however, that these younger Gen X and millennial inheritors typically want a very different type of relationship than the one you've established with their parents over the years. A relationship they want, it's more planning focused than investment centric. One that fully embraces the power of digital advice delivery and is centered on the very different priorities and goals
of these less individualistic and more community-focused future clients. So to deliver on that, however, you're likely going to need to invest both some time and some money into a handful of critical operational upgrades. I'm going to outline three for your consideration, and then we'll jump into them more deeply. Service model and pricing shifts will likely improve and change. Technology stack likely improve and change.
And the offering of estate planning and family philanthropy, discussions around giving strategies is likely to be enhanced and changed. Okay, let's get into these. First, service model and pricing shifts. Well, creating a personal connection and building trust with the next generation client is going to take time. Advisors generally can't wait until heirs inherit wealth to start building relationships. And this poses significant scalability challenges. Creating plans for future inheritors requires time and effort.
that may be cost prohibitive given that next generation client's current wealth levels. So, householding becomes important. Suppose your client service offering focuses more heavily on investment and portfolio management. Well, in that case, you'll want to invest time and resources into building a more robust goals-based planning platform that can deliver cashflow planning, debt management, even new products and services like
social responsible ESG investing, and maybe charitable giving strategies, for example. Consider offering complimentary foundational financial planning to the 18 to 25 year old adult children of your high net worth clients within carefully structured time parameters for cost containment to help establish strong relationships before inheritance. Explore offering some sort of household pricing. This is what I mentioned just a moment ago. In this structure,
Ray Sclafani (04:43.5)
you can leverage the client's relationship pricing to provide a lower fee structure to the next generation before they become inheritors. And then lastly, provide a degree of autonomy and choice by introducing next gen inheritors to several of your firm's next gen advisors. If you don't have enough young advisors on staff, the time to onboard them is right now, before the need rather than after, allowing these younger clients
to select an advisor they'll feel more comfortable building a relationship with. Let's talk about your tech stack. For most firms, one of the most significant financial investments they'll need to make if they wish to cultivate and serve next generation inheritors successfully will be adding and integrating newer technologies that enable the firm to better engage with younger generation clients on their terms. So building out your digital information repositories such as a family portal,
or online dashboard that'll help keep younger clients engaged and informed about their family's wealth and investments. Begin establishing a more robust social media identity and presence that's genuine and relatable. If any elements of your planning process are still paper-based, such as data gathering tools, goal definition, quantification worksheets, well, seek out alternatives that will enable you to deliver an end-to-end online process and experience.
Design individual communication plans tailored to each inheritor's preferred methods, such as text versus email updates, periodic online versus in-person meetings. You've got to build something they're going to want to step into to foster greater comfort, trust, and ultimately engagement. And then you've got to set up the right routine check-in structure with these younger family members, even if just to discuss whether it's market trends, their interests.
family updates, anything that's gonna be relevant to them. Now let's just tackle estate planning and family philanthropy. Any service that brings together current and future clients in a shared purpose provides a tremendous opportunity for you and your team to make and then strengthen personal connections, communication and trust with the future inheritors of your client's wealth. Estate planning and family philanthropy can be incredibly engaging and productive.
Ray Sclafani (07:07.864)
So integrating estate planning and inheritance discussions into the advisory relationship by regularly bringing up estate planning topics with clients and asking them how they want to include their inheritors in discussions to normalize these conversations over time. You want to work closely with clients to create a structured game plan for wealth transfer that includes roles and responsibilities. Show them how they can precisely control the when and how.
of asset distribution over time through the active use of various trusts with third party trustees, helping to avoid any conflict among beneficiaries. Now this is likely something you know lots about, but again, getting into the weeds and the details of these enhancements will help elevate the conversation and engagement, not only with the patriarchs, matriarchs, but also with their heirs.
Encourage clients to involve the next generation in estate planning and the inheritance discussions, whether that's facilitating an offsite planning meeting or just simply asking the client how they want the next gen, their inheritors to be involved in the inheritance discussions. Explain to them, but by setting these explicit inheritance expectations, they'll enable family members to better plan and prepare.
encourage larger family office clients to establish an inheritor advisory board of next generation members and give them an active, meaningful role in financial oversight. In a family setting, philanthropy can help reinforce family values and bring adult children closer together, working cooperatively to strengthen family bonds. Generosity is a learned behavior requiring desire, a clear strategy, trusted advice,
and an ongoing commitment, course. Whether through a foundation, a DAF, donor advise fund, or active volunteering, well, it's a great way to strengthen your firm's bond with their next generation. Purpose-driven, mission-driven advice. Work with the clients to create family legacy documents or value statements that include core values, philanthropic goals, and guiding principles that the next generation can embrace and help refine and evolve over time.
Ray Sclafani (09:24.642)
This is really about leading by example. Lastly, suppose you seriously want to retain the next generation inheritors of your client's wealth. Now that's an intentional, like you've got to build a plan. I've outlined a few things here for you today for your consideration. So let's just say you've gone through your client roster, you've identified all the inheritors, all the heirs, you've made a decision about those with whom you want to engage. In that case, you need to put your money where your mouth is.
documenting a crystal clear succession plan that imbues them with the confidence that your firm and team structures will be able to support their needs far into the future. While the historical success rate may seem disheartening, whether you believe the data or not, watching your clients' assets walk out the door as soon as the wealth transfers or as soon as the controlling owner founders in your firms retire, it's not a foredrawn conclusion. You and your team can stem the tide.
However, it's gonna require a willingness to invest in technology, the planning resources, the service and pricing models, which may sting slightly in the short run because they require capital infusion, strategy, investment, people. If you or your team expect to still be in the business and serving clients a decade or two from today, early engagement with the next generation is simply non-negotiable. In fact, more than two thirds of the wealth transfer
will be inherited by a woman. So your decision as a team how to serve more women in the future will come into play. And this existential demographic shift can quickly become an unexpected opportunity. See, as you build trusted relationships with inheritors who become brand ambassadors for your business, they'll start telling their friends and associates who they're coming to for advice and guidance. It's a win-win proposition.
With each of the episodes, we offer coaching questions, future-oriented, open-ended, and today there's four. First, what actions will you take right now to start building meaningful connections with your clients' heirs, ensuring your advisory services stay relevant across generations? Two, how will your firm's service model adapt to meet next-gen clients' evolving needs and expectations, particularly as they prioritize digital engagement?
Ray Sclafani (11:49.166)
planning focused advice and community centered goals? Third, what investments in technology, communication or talent could better position your team to become a trusted advisor to both current and future generations creating lasting family relationships? And fourth, what improvements can you make to your firm's estate and legacy planning capabilities, as well as your financial education offering to help begin building connections and relationships with future inheritors?
Hopefully in today's episode, I've triggered a couple of thoughts for you. First, are you connecting with the next generation from a relational perspective? Are you building trust with the heirs of your current client's wealth? Second, is your service offering an alignment with what they're looking for? Take time out as a team to reflect on the specific deliverables for your next generation wealth inheritors, and perhaps even consider building an advisory group of these next gen clients.
to figure out what they're looking for as you build community with this next-gen group. This could be a tremendous performative opportunity for the next-gen leaders in your firm. Well, thanks for tuning in, and that's a wrap. Until next time, this is Ray Sglafani. Keep building, growing, and striving for greatness. Together, we'll redefine what's possible in the world of wealth management. Be sure to check back for our latest episode and article.
Ray Sclafani (13:17.067)
you