Published by Investment Executive
With most full-service dealer clients in the 60-plus age category, advisors and dealers hope to build relationships with the next generation before their senior clients become disabled or pass away.
It isn't easy. Advisors who ask their senior clients for introductions to beneficiaries and adult children are often turned down. Why is that, and how can advisors change their approach to get those introductions?
Here's an example: Hugo and Alice, married for 45 years, have three children in their late 30s and early 40s. All advisor meetings and calls over the last 15 years were with Hugo; Alice was absent.
You ask Hugo if he has a power of attorney (POA) document and a will. Yes, on both counts. Alice and their daughter Stephanie will share POA and executor duties. The three children are the will beneficiaries.
You ask to be introduced to them. No need, says Hugo.
You press on. Don't your children need my help assuming they ultimately inherit your wealth? It's at this point that Hugo responds with one or more versions of:
- My children are fine.
- My children have their own advisors.
- My children are DIYers.
- My children use ROBO advisors.
- My children are sophisticated and independent — they have their own advisors.
- My children are not interested.
The better way
The problem with this approach is that it is advisor-focused, not client-focused. Sure, you can provide Hugo's kids with valuable advice, but what he's hearing is that you want a referral. You're afraid of losing the assets when Hugo and his wife pass, and you want his help.
There's a better way. Find your senior clients' pain points and address them, even if the solution does not directly benefit you. Put your clients at the centre of your efforts, not yourself and your goals.
Ask Hugo if he has any concerns about his and Alice's financial future. Find a way to meet with Alice, even if Hugo is more knowledgeable and seems to stand in the way. (I wrote about “invisible clients” in chapter 8 of Advisor at Risk).
This is a legal and regulatory obligation. And it makes good business sense, given how many widows move away from their deceased husbands' advisors. A 2023 survey by Sun Life Global Investments reported that 80% switched advisors following their husband's death.
The truth is that you risk losing the assets even before they go to the next generation, especially if you've never met Alice. Moreover, establishing a relationship with her might allow you to learn some of the couple's pain points and help solve them.
For example, Hugo didn't share with you that Alice is the main caregiver of their disabled adult son, Frederick. Hugo needs a plan to provide care as Alice grows older, and ultimately, may predecease Frederick. But he hasn't told you that.
Hugo won't discuss the issue with Alice either. This is a serious pain point for both Hugo, who cannot talk about it, and Alice, who lives in fear of having no plan for her son.
This is where you might be able to suggest options, for this and other pain points. You might recommend that a trust be set up for Frederick's care, or that certain insurance policies might be available. You might need to meet one of the other children, Stephanie or Ronald. Perhaps they can be part of the plan.
Addressing Hugo and Alice's needs will earn you a meeting with one or more of their adult children.
The trusted contact person
The other benefit of meeting Stephanie and Ronald — again, for the clients' benefit rather than yours — is to ensure you have someone to call if something happens to Alice and Hugo. For example, one of the couple's investments is doing so well that the account is in need of a rebalancing.
You call Hugo and then Alice, but there is no answer on their home or either of their mobile phones. You leave messages and send emails, but get no response. Months later, you learn that Alice suffered a stroke, and the strain of caring for her led Hugo to suffer a massive heart attack and pass away. Alice had appointed Stephanie as her POA and Stephanie is moving the assets to her advisor.
You made a mistake — years ago. You didn't take your obligation to identify a trusted contact person (TCP) for Alice and Hugo seriously, and allowed them to skip that step by signing to confirm that they did not want to identify one.
Without the name and contact information of one of their adult children as TCP, and without the knowledge that Alice was the primary caregiver of Frederick, you missed an opportunity to provide the service they needed and build a meaningful relationship with the adult children.
So, before you ask for a referral, consider your approach. Put the clients' interests at the centre and use your regulatory tools to address clients' pain points — for their benefit, and ultimately, yours.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
