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The intergenerational advisor

In a nutshell

In part 1 of this 2 part article, we discussed how a significant portion of your AuM may be at risk without you even realising it (Click here). Intergenerational transfer of wealth often results in change in stewardship of the wealth - the next generation more often than not does not continue with the same advisor who served the previous generation. That's not because of competence issues - its more to do with connect issues. You may have served the previous generation very well for years, but when the wealth comes into the hands of the next generation, you find yourself out of the picture as they have their own ideas on who should advise them and how they want the wealth invested.

The challenge therefore is to find ways of building a connect and staying connected with the next generation of your client families, even as you continue to faithfully serve and engage the key members of the present generation. The challenge for you is therefore not just how to manage intergenerational transfer of wealth, but how you are going to become an intergenerational advisor, to continue managing that wealth across generations.


Here are some ways for you to try and achieve this challenging task.

1. Money talk @ 18

Create an engaging presentation aimed at 18 year olds, educating them about spending wisely, saving wisely and investing wisely. Put in case studies of young adults who burnt their fingers badly by being unwise on these 3 aspects - spending, saving and investing. Draw lessons from these case studies and summarize a simple set of do's and don'ts with money in a manner that will leave a strong impression on youth in this age group.

You will know when your clients' children turn 18, if you have kept these records meticulously. Alongside all the paperwork you will do for change of status to major, ask your client to set up a money talk for you with the new adult in the family. Ensure that the parents are present at this session. Take sufficient time to ensure that the young adult has understood your key messages and ensure you address her queries. Ask for her email id and put her onto a mailing list which will contain only young adults.

2. Social media group for young adults

Create a social media group for young adults with an aim to promote money talks among them. Start the group with the few email ids you receive from your client families. Populate engaging videos, infographics and short yet impactful messages around how young adults can be smart with their money. For youth, smart spending will be a bigger draw than smart investing - focus more therefore on smart spending. If your content is sensible and relevant, you will see this group growing over time as your clients' children invite their friends into this group. Encourage discussions on smart spending ideas among the group - lead a few discussions to get conversations started.

3. From smart spending to smart investing

As your group widens and as your clients' children get onto earning their first pay checks, introduce another round of money talks with them in person as well as create content for your social media / website around smart investing. If some of the ideas on smart spending worked for them, they are likely to be very favourably disposed to hearing you talk about smart investing.

What you would have achieved through these timely interventions around smart spending and smart investing is to have created a favourable impression in their minds about you as an advisor who they can relate to and look up to for guidance - and not just somebody who happens to be their parents' financial advisor who just tells them where to sign on a bunch of papers that are routinely thrust under their noses.

Beneficiary meetings

For HNI and ultra HNI clients, the challenges of intergenerational transfer of wealth is often much more complex than simply creating suitable legal structures like trusts to facilitate the process. There are often differing expectations that the two generations have on how the wealth ought to be preserved / grown as it gets handed down from one generation to another. This is where you can play a key role by talking to both generations separately, understanding their perspectives and then organizing a formal beneficiaries meeting where you play the key role of a mediator, trying to get both generations to find common ground on contentious issues. A mediator/facilitator who understand both perspectives is usually in a great position to bring about a workable compromise in most cases. Apart from helping solve immediate issues and facilitating a smooth transfer of wealth, what this does for you is to earn the loyalty and support of the next generation, who sees you as a wise and trust-worthy advisor, capable of understanding them and not just their parents. This should put you in a strong position when the time comes for the next generation to decide on who will advise them on their inherited wealth.

Its all about building a connect

All of this essentially boils down to one aspect: just as you took the effort to understand your clients, relate to them, and advise them on achieving some of their dreams and aspirations, you need to make a similar effort simultaneously with the next generation in your client families. Start early is what you advise all your clients. That's exactly what you need to do with the next generation of your client families - start building your independent equation with them early - if you want to ensure that you remain the advisor to the family across generations.


Content is created by Wealth Forum and must not be construed as an opinion by DSP Blackrock MF.

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