Know Thy Successor: How To Retain Client Assets Across Generations

Here is the first step to retaining assets across generations: educate yourself on the generational similarities and differences, and then get to know the different generations in your client’s family so you can make a concrete plan to meet your clients’ successors and cultivate an ongoing relationship with them.

STEP 1: Do Your Homework

There are three parts to this step:

1. Identify your client’s generation.
2. Identify your client’s successor’s generation.
3. Ask your client to introduce you to the successor.

Part 1: Identify your client’s generation. Here’s a quick refresher:

Baby Boomers (born between 1946-1964) grew up facing the realities of the Vietnam War at a time when the nation was beginning to embrace Civil Rights. They also saw men land on the moon, inspiring them to think that they can do anything. These events have shaped their characteristics and outlook to be ambitious, idealistic, and cause-driven.

Gen-X (born between 1965-1980) dealt with the Watergate scandal, Challenger explosion and the advent of technology as we know it. In addition, they often saw the impact of divorce first-hand. Dealing with such insecurity made them wary of government and focused on their own nuclear family. Consequently, they are results-driven, pragmatic, and can be perceived as more materialistic than their Boomer colleagues.

Gen Y (born between 1981-2001) are the most diverse generation to date and have grown up in a globalized world where everything and everyone is connected. In turn, this has caused them to crave constant information and value a sense of community in all environments.

Part 2: Identify your client’s successor’s generation.

Now that you know your client’s generation, it’s time to identify your client’s successor’s generation. Most people would assume that this is the next generation, thinking that if your client is a Boomer, then the successor would be Gen X. However, with blended families and women waiting longer to have children, this is not always the case. So clearly ask who the successor is and how that person fits into the family lineage.

Part 3: Ask your client to introduce you to the successor.

How do you start engaging the client and successor in a financial conversation together?  The truth is this can be a difficult conversation because the parent may not be comfortable discussing family wealth details that include which child inherits how much and why.

In addition, the successor may not want to know the details of the family wealth. The family CPA can’t have this conversation nor can the family attorney – they need to stay neutral. This type of conversation needs to be handled by someone who is not being paid on an hourly basis and who sees the whole picture.

That person is YOU.  So, how do you do it?

During my workshops, some FAs get nervous at this stage, mumbling “I don’t want to look like I’m waiting for my client to die! We have plenty of time to have that conversation.”

I certainly appreciate the sensitive nature of this issue.  However, this isn’t a matter of appearances; it’s your duty to learn as much as possible in order to best protect your client’s assets (and yours).

Depending on your client’s wealth, family size and estate plans, there are many legal and tax decisions to be made sooner than later. Taking this step will help you and your client find appropriate, legal and reasonable ways to be as tax efficient as possible.

And by the way, your client chose you as their FA for a reason: they trust you and you’ve obviously done a good job managing their wealth.  They don’t want anyone else managing their money, they want YOU – but their successor may not – which is why you need to take action.

If you explain your reasoning this way, you will have a higher chance of meeting with both parties together.

Please share on the blog what percentage of your clients are Baby Boomers and what you are doing to prepare for the transfer of wealth.