Partners in Prospecting

Intergenerational Wealth Transfer: We are Family

April 23, 2020

Intergenerational Wealth Transfer

The next decade we will see a massive intergenerational transfer of wealth estimated to be $1 trillion, the largest in Canadian history*. Yet, there’s no guarantee that the tech-savvy heirs to this windfall will turn to their parents’ Advisors for financial advice and planning. What are you doing to plan for this transfer? Have you approached your clients about meeting their children?

I worked with an Advisor whose largest elderly client died suddenly in a car accident. He was predeceased by his spouse and they had five children. The Advisor knew the names of the children and also that they were all adults. However, he had never met any of the children. He subsequently called them to give his condolences and they started to ask questions about their father’s accounts, what they needed for probate and how to transfer the accounts out. The Advisor tried to convince the eldest child that he had done well for his father and he would like to meet in person. You can imagine what happened next. Since the Advisor never developed a relationship with any of the children, they had no allegiance to him and he lost all the of accounts that had been with him for years – an unfortunate lesson to learn the hard way. This is why it is key to put a focus on your clients’ children before it is too late.

Top Three Strategies to Manage Intergenerational Wealth Transfers

Below are the strategies employed by Advisors that I personally know, who have been most successful in managing intergenerational wealth transfers.

1. Provide an educational seminar or web series focusing on financial literacy for the children.

As you know, there is talk about introducing these types of courses in high schools but it has not been implemented as of yet.

Topics may include:

  • What would children do with a substantial sum of money, left to them by their parents?
  • What decisions would they make about their investments?
  • What would they do to demonstrate long-term asset protection strategies?

Imagine a training opportunity where you work with your clients’ children for a length of time to address those questions, sharing the results with the parents at the end of the period. This would not only provide a solid experience for you and the next generation, but it would also allow for the formation of a relationship with those poised to inherit wealth.

2. Invite your clients’ adult children to a dinner with the parents.

One Advisor told me that he calls his clients and indicates that he wants to be introduced to the adult children so that when the time comes they will feel comfortable coming to them with questions about the estate. The Advisor said, it helps to get to know client’s children by sharing a meal. It doesn’t have to be expensive and not necessarily targeting only your high net worth clients.

3. Hire for the next generation.

Managing a next generation of clients requires a next generation of Advisors. Every week, we hear about next-gen children preferring the on-line discount broker approach to investing. There is a need for next-gen Advisors—and for a good reason. Next-gen clients will want to work with someone who will be flexible and truly listen to their ideas. Often when they look at Boomer aged Advisors, they may not see past the gray hair. Many firms are positioning themselves to capture the trillions of dollars of wealth that will transition between generations over the next 20 years by hiring multiple generations of Advisors or support staff to work with multiple generations of wealthy families. Everyone is searching for young, talented Advisors who have the luxury of being in demand.

The key to any approach is to ensure your current clients understand your desire to meet with their children to bring them into the loop (provided your clients are onside with this approach because you have explained the importance to them). Adopting one or more of the above approaches can help you to retain assets, deepen your relationship with your existing clients and, perhaps, even gain some referrals from their children.

*Investor Economics Insight, January 2019. Strategic Insight.

As usual: There is a song title in this blog post. Did you find it?

About Jennifer Kuta

For more than 25 years, I have worked with Advisors helping them build their businesses. My commitment to you is to partner with you in your practice and offer solutions to help build your business.


The contents of this blog are the personal views of the author and not necessarily the views of Caldwell Investment Management Ltd. The contents are provided as general in nature and should not be relied upon nor construed to be the rendering of advice. Readers should consult with their own compliance/legal advisors for advice on their specific circumstances before taking any action as sales and prospecting activities are subject to regulatory oversight.

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