Recently I’ve had a number of conversations with financial advisers on the topic of intergenerational planning. Increasingly advisers can see the very real threat of an aging client base with no real strategy for engaging with the younger generations. Indeed, this could be the most significant challenge financial advisers will face in the next 30 years: helping clients to move from inertia to activity in planning for the transfer of their wealth – while ensuring asset continuity within the advisory practice when the wealth changes hands.

Research in the US indicates that 60% of those who receive an inheritance will sack the adviser previously responsible for overseeing the assets, in order to manage the money themselves or appoint their own adviser. We are seeing a similar trend here in the UK. It would appear that they are happy to receive the inheritance, but don’t want to inherit the adviser that comes with it.

So as an adviser, how can intergenerational planning help to limit the potential risk to your business?

Last year I sat on an expert panel sponsored by Aviva and hosted by Mike Barrett (the lang cat) alongside Jason Butler (author and columnist, previously Bloomsbury Wealth), Kunle Olafore (SK Financial) and Keith Richards (Personal Finance Society). We talked through the threats and opportunities, and offered guidance for creating an intergenerational planning offering.

You can watch the video below.

Abbie Knight from DISCUS, Aviva Expert Panel Discussion Video from Abbie on Vimeo.

If you’re don’t have time to watch the full video (it’s 21 minutes long!), here are a few of the key points we raised:

»  Redefine your clients. Rather than view clients as either an individual or couple, classify them as ‘families’. Working with your clients to create a family map or family tree will help you to understand the important relationships in their life. It can also help to identify who else to engage with as part of the overall relationship – rather than just the parents (or grandparents).

»  Intergenerational planning is often an unconscious outcome of proper Financial Planning. Many advisory firms, without realising it, have been addressing this challenge in their business by offering a full Financial Planning service. Proper Financial Planning gets to the heart of what matters to clients, including their relationships with other family members and how they intend to pass wealth on.

»  Re-position your services. Offering to act as a financial mentor or coach for the children of your clients can help to establish a relationship with the younger generation. This approach can also strengthen the relationship with your primary clients, as they see the value of the education for their children.

»  Be prepared to run loss-leading initiatives. At first, depending on the wealth profile of your client bank, you may need to offer additional services to the younger generation at a very low (or no) cost. The aim here is to build a relationship, establish trust and help these individuals to build enough wealth to access your full services at some point in the future.

»  Research the younger audience and create services aligned to their needs. Rather than blindly building a service for the next generation, take time to genuinely understand their needs and preferences, then create an aligned service proposition. No doubt this will involve the use of technology, both to market the new service and to deliver it.

»  Hire graduates and other millennials. They can help you to build out your service offering – and deliver it. This can create an entirely new revenue stream, rather than just stemming the flow of assets away from your firm as the older generation leaves it could lead to new business from other millennials who previously viewed your offering as ‘not for them’.

»  Segmentation. Before looking to adopt any sort of intergenerational strategy it’s important to take time to segment your client bank and lock down what you will offer each segment. While you may need to ‘loss lead’ in some instances, technology and light touch services could help you to cover costs or remain in profit for all service categories.

»  Use video. The entire panel agreed that video is the way forward. Short, easy to digest and easy to share videos will enable you to get your brand, and importantly, key messages in front of the right clients. Rather than talking to camera, explaining complex concepts, think about adding humour, using animation or powerful case studies. Kunle provides an excellent example of SK Financial’s ‘what do you trust?’ campaign.

If you would like to watch all of the videos in the series and claim CPD, go to the Aviva adviser website (note that this content will only be available until October 5th, 2017).

As always, if you have any questions or comments please post in the space below.


This article was created for the DISCUS website based on an Aviva expert panel discussion on intergenerational planning and webcast video created by AVIVA. You can watch the full webcast video series here ›