I recently polled a group of friends at our weekly coffee meetup. The majority are retired, have adult children, and are all affluent (even though most would deny it). My questions focused on their adult children – their occupations, mentalities, and overall lifestyles.
As the discussion wound down, we started talking in general terms about inheritance. The majority of the group responded the same way: “They know it’s coming.” This prompted me to ask my crucial question; “Have any of your kids met with your financial advisor?”
I was met with dead silence, all looking at one another around the table. I was shocked to find that none of these future millennial millionaires has met with their parent’s financial advisor.
What does this mean for what is expected to be the greatest wealth transfer in human history? The estimates range from $30 trillion to $70 trillion transferring to younger generations in the coming years. By the time Alexandria Ocasio-Cortez turns 50, millennials will be the wealthiest generation ever. Not to mention, many of these clients’ children are wealthy in their own right and have high COI potential.
Who is going to advise them on managing their wealth? A Robo-advisor? Or… will it be you or a junior advisor on your team? It better be you and your team!
I know you’ve heard all this before, and you’re probably sick of hearing your firm broadcasting about this opportunity. Our research tells us that over 60% of affluent clients report that their financial advisor has never expressed an interest in working with their children. The same children that will become heirs of their parents’ estate and future affluent clients.
That’s not a good indicator. Too many advisors are not making an effort to put themselves in a position to capitalize on this massive transfer of wealth. So, let’s take a coaching tip from hockey’s great Wayne Gretzky — let’s skate to where the (affluent) puck is going to be.
Your task is relatively simple for veteran advisors leading wealth management teams; assign your junior advisor(s) to meet with all the children (college age or older) of your affluent clients. Many of them will not have significant assets yet, but some will, and most will eventually.
If you want to prioritize your list, look at three critical areas:
- Inheritance Potential – a measure of this person’s inheritance potential, including the parents’ assets, number of heirs, and spending habits.
- Current Income – some of your clients’ children are high-income earners already. There is a little guesswork involved here. (Sidebar: LinkedIn is a tremendous tool for finding client family members and viewing their job titles.)
- COI Potential – assessing their current ability to connect you with potential clients.
This initiative isn’t just about making money. It’s doing the right thing for your affluent clients, guiding their adult children to the best of your ability, and helping your junior advisor generate some business in the meantime. This is solidifying your legacy as an outstanding client-centric financial professional.
Go beyond simply assigning a junior advisor to this task; make it a priority. Let the parents know why and who will be contacting their children, track the activity, and make sure you’re debriefed after every next-generation meeting. We’ve even had advisors report to us that clients have asked if they could meet with the children of a close friend after a next-generation meeting.
If you’re not a Boomer advisor, you still have a tremendous opportunity, but it requires some homework. This involves identifying the next generation of affluent families in your community. While this might appear daunting at first, odds are you already know a lot of these future millionaires.
Your challenge, and opportunity, is to approach each individual as though they’re an ideal prospect — a future affluent client. Granted, many might not yet qualify, but it’s important to remember that your overall objective is to make a connection.
Much like a farmer, you’re planting seeds, fertilizing them, and preparing for a BIG harvest. This is the opportunity for financial advisors who are willing to keep skating to where the assets are going to be.