Conventional wisdom states that when it comes to retaining assets under management on family wealth in transition, advisors don’t have much of a shot. Various surveys peg the odds of the younger generation removing assets from their parents’ advisors during a wealth transition at 80 to 90 percent. But a poll from Merrill Lynch’s Private Banking and Investment Group reported by the Wall Street Journal reveals that about half of 18 to 35 year old surveyed would consider retaining their parents’ advisor to manage their own wealth.
This is good news for advisors, who are getting older — the average advisor is in his or her 50s — as more of their baby boomer and older clients either begin to transfer wealth to the children during their lifespan or pass on. It also leads me to wonder if there is a different perception for the younger wealthy, those cited in this survey, than Gen X, those born from 1965 to 1980. Gen X’ers range in age from 33 to 48 (younger Gen X’ers do fall into this survey’s demographic), may have different sentiments about removing money from their parents advisors than Gen Y and younger counterparts.
It’s an interesting debate for me to contemplate as a baby boomer and parent of Gen Y children. I believe that younger baby boomers and Gex X’ers have forged closer bonds with their children that could lead to this difference in perception of advisors between these two generations. Gen X’ers may be still determined to demonstrate their independence from their parents, while those in Gen Y and younger members of Gen X who were raised in the “helicopter parent” era may feel more comfortable with their parents and their parents’ advisors.
Their parents were likely are more likely to be transparent about money than their older counter parts and the closeness between parents and children encourages their children to view their financial advisors as allies rather than adversaries.
Financial advisors have the opportunity to build on this goodwill by taking some of the steps mentioned in the Wall Street Journal article — encouraging parents to discuss inheritances and finances with their children at an early age, introducing the advisor as a trusted partner and communicating their values around money. FInancial advisory firms can also make it as easy as possible for children of their clients to relate to them by hiring younger associates and building communications channels in social media that resonate with younger investors.
All in all, advisors should take heart that all is not lost when it comes to money in motion via family wealth transfers and inheritances. There’s plenty of opportunity for them to stay in the game, as long as they make genuine, ongoing efforts.