Redefining wealth transfer: Strategies to reach clients’ children

Financial advisors are at a pivotal moment as we approach one of history’s most significant wealth transfers. The digital-native Gen Z, poised to inherit this wealth, maintains a unique, sometimes skeptical, perspective on financial guidance. The challenge was underscored by a recent Finra Investor Education Foundation report that revealed a mere 30% of Gen Z investors turn to financial planners. Instead, they rely on digital platforms, social media and personal networks. Given this evolving landscape, advisors are prompted to refine their strategies to emphasize their relevance and become trusted allies for emerging investors.

INITIATE EARLY CONVERSATIONS

Build long-standing relationships based on trust by engaging with your clients’ children as early as elementary school. Position yourself as a cornerstone in their financial journey through family meetings or joint sessions focusing on financial planning and aspirations. These meetings shouldn’t be purely business-focused; it is wise to keep them light and free of jargon, avoiding language that feels tedious. Remember that the path to building trust varies with age, and tailor interactions for different life stages.

For younger children, the conversations can center around their budding passions and interests. Advisors set the groundwork for deeper future engagement by connecting on these initial touch points. As these children grow and transition into middle and high school, their horizons broaden. It becomes pertinent to steer discussions toward their aspirations, possible career trajectories, and the introduction of footing financial concepts, such as budgeting and saving.

As a young college student, I loved the University of Texas. Anyone who would bring up Longhorn sports had my attention. Think about how you can personally connect with your clients’ children and remain authentic — showing a genuine interest and profound understanding of their interests will always resonate most deeply with the youth, laying the foundation for a lasting relationship.

MEET CLIENTS’ CHILDREN WHERE THEY ARE

Embrace the digital age. A sleek, user-friendly website and an active social media presence aren't just nice-to-haves — nowadays, they’re expected. Regularly posting relevant content and setting yourself up as an educational resource will cement the trust you are looking to build. Take into account that younger generations consume content in short lengths; they are accustomed to streaming services, where they can watch on demand, and brief social media reels, where they can get their news and entertainment in a swipe! You must compete with the fast-paced, nonstop information funnel.

RECRUIT ADVISORS, SET UP YOUR INFRASTRUCTURE WITH NEXT-GEN CLIENTS IN MIND

To attract the next generation of clients, actively recruit younger advisors. Invest in back-office technology and foster a culture that appeals to emerging financial professionals. Ensure these advisors share interests with clients’ heirs and can make a mark at annual meetings. One technology you may want to consider is compliant messaging platforms. Both young advisors and clients often prefer texting over emails and phone calls.

Similarly, a long-term commitment to a financial advisor is not necessarily a priority. Offering alternative service models would make you appear unique among the pool of advisors presenting their pitch. Instead of the traditional asset-based fee, an engagement-based fee provides financial planning as a one-time project with the option of becoming a continued service. This flexibility could be the deciding factor between a young client choosing your services or opting to trust their financial decisions to the Internet.

For modern investors, the focus isn't solely on financial returns; they also value their investments' societal and environmental impact. As a financial advisor, keep an open mind and delve into the world of sustainable investments and socially responsible portfolios. By keeping a finger on the pulse of modern trends, advisors can anticipate and cater to the evolving interests of younger generations.

BRIDGE THE FINANCIAL LITERACY GAP

Equip the next generation with knowledge by hosting seminars or events on financial literacy tailored to younger audiences. One of our advisors hosts an event for clients and extends the invitation to their young children or grandchildren. During the gathering, children can build Lego piggy banks to discuss savings strategies in-depth. It can start with setting aside your spare change and setting a goal. Do they want a new fancy toy? With that toy in mind, you can guide them through saving some of their allowance. Initially, they don’t have to think of you as a cookie-cutter advisor, it can start as a simple guidance that shines light into something they want and how they can achieve it. This process can leave lasting impressions that will result in their coming to your firm for more complex investment advice in the future.

The forthcoming wealth transfer signifies more than just assets changing hands — it's a symbolic passing of trust, knowledge and relationships. Financial advisors can secure their role in this transformative period and beyond by reshaping their strategies and genuinely connecting with the next generation.

Dana Rhodes is senior vice president of advisory services at Axtella.