Research indicates that more than 70% of heirs will fire or change wealth advisors after they inherit. Clearly this poses a huge risk to advisors, but it says a lot about how advisors are currently dealing with family groups. It’s also worth considering the risks of this situation to families themselves.
A significant proportion of wealth advisors to family groups do not appear to be engaging with the rising generation, and certainly not taking the holistic and family-wide perspective of wealth that families need. When the wealth is a family and legacy asset, the client isn’t just the incumbent, but the whole family. If the advisor (and their firm) wants to stay in their role for a long time, they need to engage with multiple generations, and be relevant to them and listen to the concerns and needs of multiple stakeholders.
From the family’s perspective, changing wealth advisors can be disruptive and risky. If the rising generation are not part of (and on board with) the family’s long-term investment strategy, they may have a long learning curve when it’s their time to take the reins. Any shift in strategy should happen at the appropriate time rather than be triggered by a change in control. So it’s also in the family’s interest to have a wealth manager that is engaged across multiple generations.
Consider This: What is the involvement of rising generation family members in the family’s investment goals and strategies? What relationship do they have with the family’s investment advisors and/or family office professionals? What would happen to any of these relationships in case of the sudden death of a key family member?
Further reading: https://www.advisor.ca/my-practice/conversations/advisors-must-improve-how-they-work-with-wealthy-families/, https://www.bizjournals.com/albany/news/2022/08/18/what-makes-a-good-intergenerational-wealth-managem.html, https://gulfbusiness.com/how-wealth-advisory-must-be-customised-for-the-new-generation/, https://www.wealthprofessional.ca/news/industry-news/why-advisors-must-work-with-next-generation-of-business-owners/363811, https://www.internationalinvestment.net/news/4034632/financial-advisers-warned-most-heirs-change-inheriting-wealth, https://www.nasdaq.com/articles/help-clients-on-their-life-journey-youll-both-win-2021-01-15, https://www.prnewswire.com/news-releases/64-in-jcf-study-point-to-nextgen-inheritors-lack-of-knowledge-about-their-own-family-wealth-as-major-obstacle-301178504.html, https://www.ftadviser.com/investments/2019/02/05/how-advisers-are-missing-out-on-billions/
Actionable Generational Wealth Succession:
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