Keeping It Going: How to Continue Working with the Family.

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An article by Michael Sisk in Barron’s Online titled “How to Keep the Kids” points out that “Most financial advisors hope to build strong, trusting relationships with their clients over many years. Yet most fail to address the single most important thing to their clients: family.”

Most financial advisors hope to build strong, trusting relationships with their clients over many years. Yet most fail to address the single most important thing to their clients: family.

Citing Sallie Krawcheck, president of Global Wealth and Investment Management for Bank of America, half of all wealthy individuals in the U.S. would like to involve their family in the wealth-management discussion, but their advisors never suggest it. Not asking if a client would like family members involved can have serious consequences.

For example, the article points out that a mere 2% of children keep the money they’ve inherited with their parents’ financial advisor, according to a PriceWaterhouseCoopers Global Private Banking/Wealth Management survey. Similarly, only 45% of wives keep their assets with the same financial advisor after the husband dies. The reason for this high attrition is simple: The advisor has no relationship with the client’s family.

It’s also important to point out that failing to involve family can also have a negative impact on the heirs. According to Diane Doolin, senior vice president and senior investment management consultant at Morgan Stanley Smith Barney and co-founder of the Institute for Preparing Heirs, in 70% of the cases when wealth is transferred from one generation to the next the estates lose assets, the family loses cohesion or both. “We do an excellent job preparing assets for heirs, but as an industry we don’t prepare heirs for the assets” she says. (Check out the Institutes Reading List here – I’ve read several of these books and have integrated many of the ideas into my practice)

After all, most estate planning is done to facilitate family communication, enhance and preserve family wealth and values. With due regard to ethical issues and confidentiality concerns, encouraging clients to involve spouses and the next generation in planning can do much more than documents alone.

Finally, to the extent you can involve younger generations before they have developed relationships with other advisors the more likely they are to work with you.

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