Wealth managers emphasize intergenerational planning

Financial planning firms are placing greater emphasis on securing clients from different generations of the same family.

“We’re seeing more firms with clients from different generations,” said Matthew Schulte, senior vice president of financial planning for eMoney Advisor Inc. in Consho-hocken, Pa. “Everybody is fighting for assets under management, and one of the best ways to secure that is to work with the next generation.”

The fruits of pursuing an intergenerational financial planning strategy will be on full display tomorrow at the Brentwood Country Club in Los Angeles, where the financial planning firm Lewis Wallensky Associates Inc., based in that city, will hold its 40th anniversary party.

“We hold an anniversary party every five years,” said Lewis M. Wallensky, the firm’s president. “And at our 35th anniversary party, there were several tables that had three generations of clients in the same family.”

Mr. Wallensky estimated that about 5% to 10% of his client base comprises different generations of the same family.

“We’ve always encouraged our clients to bring in their children,” he said. “The primary reason is that if anything were to happen to them, we want the children to know who we are,” Mr. Wallensky said. “When the kids do come in, they are more likely to become clients. And the ones who come in on their own after hearing about us from their parents are a self-selecting group who are the most likely to become clients.”

The key to his firm’s intergenerational success, Mr. Wallensky said, is simple: “Financial planning works.”

“Different generations can see what we’ve done,” he said.

Mr. Wallensky’s firm has been around long enough to have gone through the entire life cycle. “We’ve dealt with marriages, births, college funding, investments, estate planning and death. We’ve been through volatile markets before, and children can see that we didn’t panic and their parents got through difficult times in good shape.”

Technology is also helpful in building a multigenerational client base, said Mr. Schulte, whose firm supplies software programs to financial advisers.

“Everything is more accessible now,” he said. “No matter where they are, family members can share information and financial documents among themselves and with an adviser. Technology platforms also have allowed family members to share and open up information about a family business.”

Videotaping the memories and statements of an older family member is another technology tool being used to strengthen family ties to an advisory firm.

The Life Services division of The InvestLinc Group LLC, a wealth management firm based in Chagrin Falls, Ohio, specializes in recording the “legacy memoirs” of family members for posterity. “It becomes part of the fabric of wealthy families’ lives,” said David Glover, Atlanta-based managing director of wealth services for InvestLinc. In addition, the memoirs have been “unquestionably helpful” in allowing us to secure new clients in the same family, he said.

“We try to involve future generations at the conclusion of the planning process, and the legacy memoirs take it to the next step. Families are proud of their history, and it helps bind them together,” Mr. Glover said.

Involving family members from different generations in financial planning, however, can also be challenging, Mr. Wallensky cautioned. “Some families are not so open,” he said. “Sometimes there is no love lost between different generations, or there are issues with the children or different spouses, or different advisers are involved.”

Advisers who attempt to seek new clients from the same family need to be prepared for what may happen, Mr. Schulte said. “Things can devolve into deep family issues,” he said. “It’s all about the psychology of wealth. You don’t know how people are going to react. Some families don’t want to reveal financial affairs to the next generation. Others believe children should do it on their own, or may have bad habits and shouldn’t be involved.”

But when intergenerational issues work out, things are easier for everyone, Mr. Wallensky said. “When a parent dies and children are already involved,” he noted, “you don’t have to explain everything, because they know it already. There’s less work for us and lower fees for the client.”

Charles Paikert can be reached at [email protected].