According to a 2021 study by Cerulli Associates, an estimated $70 trillion will move from one generation to the next over the next two decades. Unfortunately for many longtime advisors, that same study suggests that many members of the next client generation will not keep the same financial advisors their parents had. How can you ensure your firm has staying power? The four steps below show how the family meeting can help engage the next client generation and support a smooth process in which every member of the family feels their goals are heard and understood.
1) Align on family goals.
Estate planning typically centers on assets—namely, which ones will be passed on—but many other important matters deserve to be handed down from generation to generation. An estate plan can’t adequately convey wisdom, traditions, philanthropic goals, and investment principles (to name a few) on paper. Discussing the intent behind these aims and aligning on overall goals helps the next client generation feel connected to their predecessors. This process will lay the groundwork for fruitful meetings in the future.
2) Finalize the guest list.
To get started, you may want to suggest a kickoff meeting with just your primary clients. You can spend that time helping them explore and develop language around the values they want to instill in their family across generations. Once you’ve laid the foundation for effective meetings, ask your clients to consider which family members of the next client generation should attend the next session. The list will likely include children, grandchildren, and even in-laws. You may also want to invite other experts who are closely involved, such as the family attorney and accountant.
3) Focus on the truth.
Everyone, including advisors, benefits when these family discussions are rooted in honesty. Structure the conversation so family members understand how the family achieved its wealth and the level of effort required to maintain it. Miscommunication of needs and goals can end up being a reason that an inheritance fails to endure through successive generations. A discussion could also open a door no one had previously considered. For example, after hearing their children’s charitable intent, clients may find it more beneficial to leave assets to a donor-advised fund rather than making bequests directly to individual charities. Once the family’s charitable goals are uncovered, you’ll want to reiterate the importance of access to ongoing professional guidance for keeping financial plans up to date.
4) Make it a habit.
A one-and-done talk won’t be enough to nurture relationships and encourage good financial behavior. Setting a specific frequency for these conversations to continue over time will make room for them on everyone’s calendar. Of course, everyone should keep in mind that the timing might need to change. Life events, such as deaths, births, and employment changes, can shift a family’s timeline and alter goals, so it’s essential to stay current with your clients’ status. It may sometimes be necessary to call an impromptu meeting.
Create a Legacy That Lasts
Family communication over financial matters can quickly become fraught or result in wealth mismanagement. Fortunately, regular discussion can help foster a multigenerational approach to financial planning that serves everyone’s goals. For financial advisors aiming to engage with the next client generation, facilitating an effective family meeting can build a successful foundation for future success.
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This post originally appeared on The Independent Advisor, a blog authored by subject-matter experts at Commonwealth Financial Network®, Member FINRA/SIPC, a Registered Investment Adviser.