Keeping the Heirs When Clients Die

The good news: According to the Investment & Wealth Monitor, “Every year for the next 50 years, $1 trillion will pass from one generation to the next, resulting in the greatest wealth transfer in the history of the United States.”¹ If you are poised properly, you can capture part of these assets as they are passed from one generation to the next.

The not-so good news: When your clients die, chances are you will lose those assets to another financial advisor. More than a 95% chance to be exact. “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.”²

If you’ve been working hard at keeping your existing clients happy while also acquiring new ones, add replacing lost clients to the list. “Ronald Zeeb, founder of the Heritage Institute, said it takes four new clients to replace the revenue lost when an account is lost through a generational transfer.”³ The most obvious reason why this is occurring is that there is no relationship between you and your clients’ heirs in the first place. Advisors do a great job helping their clients accumulate wealth, but often times drop the ball when it comes to how the wealth will be distributed at death. You and your clients may realize what a great job you have done for them over the years, but that does not necessarily mean their heirs understand what a great job you have done. According to Financial Advisor Publications, some other reasons cited are:

• “The young heirs don’t believe their parents’ advisors are up-to-date on current tax and estate law, as well as investment trends.

• Baby boomers and younger generations are much less impressed by authority figures.

• The needs of each generation are different, thus younger generations have a different focus.”⁴

Convincing the family that you can produce better-than-market returns or outperform your competitors is pretty tough to do. Even tougher is living up to that promise over the long-term. But, if you can provide the family with information and resources to help them preserve and protect their retirement assets, and even create a lasting legacy, you have differentiated yourself from other financial advisors and provided true value to the entire family.