Top financial advisers focus on client heirs: Jefferson National survey

Top financial advisers focus on client heirs: Jefferson National survey
Retaining assets of clients after inheritance is more of a priority for successful advisers
JUL 12, 2016
Successful financial advisers are more focused than most on retaining client assets after that money is passed along to heirs, a recent survey found. Advisers who oversee a high level of assets and those who are high earners both said holding onto clients' heirs is the second-most important thing they can do to enhance the profitability of their practice, according to a Jefferson National survey of advisers released last month. “If you retain the assets, it's less work and more profitable than what's involved with new assets,” said Ryon Beyer, principal of Hemington Wealth Management. The strategy ranked third with advisers overall. Adding new clients is the most popular profitability-boosting plan for all advisers, as well as with the successful subsets, the survey of 700 advisers found. Successful advisers include those who individually manage a total of $250 million or more in assets or who have more than $500,000 in personal yearly income, according to the study.
Most important thing to improve profitability of practice
(More: Adviser's Consultant: How to create a wealth transfer process) But studies show that heirs often bring the assets to an adviser who they already work with or choose to take on the asset management duties themselves. In some cases, the inheritance is split among so many parties that there isn't much left to manage. Advisers increasingly are trying to figure out how to appeal to clients' kids and establish a relationship as they face a giant transfer of wealth from the baby boomers to Generation X to millennials. In all, it's an estimated $30 trillion on the move over the next 30 years. (More: The great wealth transfer is coming, putting advisers at risk) About 85% of the successful advisers surveyed in the Jefferson National study said they have a strategy to retain heirs, compared with 69% of all advisers. “There is a lot of wealth at stake,” said Michael Krol, chief financial officer of Waldron Private Wealth, in the report about the survey. “We know children have different needs than their parents and we developed a formalized service offering that's relevant to the next generation.” Reaching out to clients' heirs is an important investment in the long term, he said. (More: 7 strategies for holding on to families) “The real compensation comes by not losing the client,” Mr. Krol said. At Hemington Wealth Management, the strategy for holding on to assets after inheritance involves getting to know the potential heirs as soon as clients are comfortable with bringing them in to discuss established estate plans. Their advisers help the children of clients with comprehensive planning of their own, showing them early on the value of financial planning, Mr. Beyer said. “Most people are getting it wrong, thinking working with younger clients has to be all about talking via text message,” he said. “We have found, regardless of age, if there's any sophistication there or a meaningful amount of assets, they take planning seriously and want to be treated professionally, just like their parents are.”

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