Last month we addressed how MainStay Investments' 2006 edition of the Across Generations research identified, among mass affluent investors, the communications disconnect between generations when it comes to matters of financial planning and wealth transfer. The research further sought to discover how advisors could help such clients with these difficult conversations. It turns out that clients welcomed proper financial advisor participation in facilitating "difficult" conversations between clients and their heirs. This month, we'll address how to turn that discomfort into an opportunity.
MainStay found that the inertia regarding family/heir communications represents a tremendous opportunity for the advisor, especially when you consider that nearly half of both children (47%) and parents (46%) surveyed agreed that using the same financial advisor would make managing wealth transfer easier.
By providing this much-needed service and connecting with extended family members, advisors maximize the likelihood that the assets will remain under their management once the assets have changed hands.
The Role of the Advisor
Clearly, this is a topic one doesn't launch into matter-of-factly and should be the domain of only a client's primary financial advisor. But for strong client relationships–ones in which advisors maintain a high level of trust and a long track-record, an advisor can do his client a great deal of good by offering to help facilitate the transfer-of-wealth discussion among family members.
Consider the following tactics:
Involve the Spouse. If applicable, an advisor should involve the client's spouse in a few meetings throughout the year. It's the most obvious tactic, but one that is often overlooked or taken for granted. Developing a stronger relationship with the spouse will help advisors solidify their position and instill confidence in his/her ability to continue managing the assets if a spouse were to pass away unexpectedly.
