Financial Education – How Advisors win the great Wealth Transfer.

teens learning finance

By providing Financial Education as a service for their Client’s families, Advisors are turning generational Wealth Transfer from a risk into a growth opportunity.

Written by Brendan Kenalty | MBA

The generational wealth transfer is upon us. In the next 20 years trillions of dollars will be inherited by the children and widows of the wealthiest generation in history of the world.

For Financial Advisors and their firms, this generational wealth transfer is both a big risk and a big opportunity. Data shows a big chunk of each advisor’s current AUM will be changing hands during this transfer, so the battle has already started for Advisors to win the next generation of clients.

A few facts:

  • 87% of Children inheriting money don’t stay with their parent’s Financial Advisor
  • 50% of widows switch Financial Advisors within a year
  • 90% of Financial Advisors have no relationship with the children of their clients

Building full-family Relationships are how Advisors win the generational Wealth Transfer.

The advisors who are winning this Wealth Transfer opportunity are those who proactively build deep relationships with their Client’s entire family.

It’s easy to leave any service provider if you don’t have a personal relationship. Therefore it’s vital that Financial Advisors and their firms build relationships with the entire family of their clients, and they must do it quickly. Every member of the family should know, trust and see the value their Advisor plays in their financial success.

Offering Financial Education as a service is an opportunity to build full-family Relationships.

An existing Advisor and their firm has a tremendous advantage in this transfer. Most clients want to know their hard earned wealth will be taken care of by the people who inherit it. They trust their Advisors to help protect it, and do elaborate estate plans and trust specifically to protect it.

One of the biggest risks to these well laid plans is that the inheritors don’t have the same level of Financial understanding to make informed decisions, and to appreciate the important role a Financial Advisor plays in the process.

Fun Fact #1 – People generally choose their future financial Advisor by the time they are 25, so it’s vital to establish a relationship before then.

Financial Education is WIN-WIN-WIN for Advisors, Clients and their families.

Clients worry about their families. They want to help prepare them for the same financial success they’ve had. Helping your clients ensure key members of their family have a basic level of financial knowledge, and clearly understand the families situation, basic documents and the prepared plan benefits all parties.

  • Clients get peace of mind
  • Advisors build relationship with family members as trusted financial expert
  • Family members get the financial knowledge to protect their inheritance, and develop plan to. achieve their goals

Fun Fact #2 – Millennials have lowest Financial understanding of any generation, so these types of programs can be of tremendous benefit to them.

2 ways Advisors can deliver Financial Education to their Client’s families.

With the support of their firms, Financial Advisors can start to deliver full-family financial education programs. Here are 2 examples of the types of programs we are already seeing in the market.

Idea #1 – Establish a Financial Education program for your Client’s children.

We are seeing firms start to partner with 3rd party education companies to launch firm branded Financial Education programs designed to cover the basic elements of personal finance (income, savings, debt, investments, budgeting) for children between 14-22 years old.

Best practice is breaking the program into 3 stages, with appropriate material for grade school, high school and college levels. Material and events are prepared to be interactive and engaging, teaching children of each age group the relevant, real world concepts which begin to build an appreciation for money and money management.

Many of these programs involve 2 types of activities:

  • In-Person events                     (2-4 sessions covering basic material in fun, engaging way)
  • On-Going communication    (content shared 4-6x a year reinforcing key topics or ideas)

These programs deliver real impact. Here’s a recent article showing the impact these programs can have for Wealth Management firms. Contact Teresa Leno or Brendan Kenalty for more information.

Idea #2 – Provide Financial Information Hub for entire family.

One of the easiest ways to engage your Client’s family, is to offer a secure, digital vault where they can store all of the family’s important financial documents in one place.

This vault can be tremendous win-win for Advisor and Clients, by providing a natural connection and conversation point with family members.

  • Client’s get a simple, secure place to have all their information in 1 place
  • Advisors become the conduit to all financial information for the family

Advisors provide all key family members with access and training on what information is contained in the family vault, and why it is important. Through this training with family members the Advisor reinforces their expertise and their important role as financial coach and coordinator.

Here are a few examples of information contained in the vault:

  • Parents financial statements & plans
  • Tax returns & information
  • Real estate & mortgage information
  • Bank & loan information
  • Wills
  • Contacts & passwords for accounts

As an example, Future Vault a leading provider of Digital Vault services for Wealth Management firms across North America, can help your firm use secure document sharing to engage and educate the entire family. Contact Kristian Borghesan for more info.

Financial Education is an Advisor’s trojan horse to building full-family Relationships.

The Wealth Transfer battle has already started. Financial Education can be your secret weapon to building deep, enduring relationships with all your Client’s family members. Your competitors are already rolling out these type of programs, so get started soon.

I’m very passionate about importance of Financial Education for kids. Studies show learning the basics of how money works at early age has tremendous impact on a person’s financial situation later in life.

Please let me know if you have any questions or would like more information. I have lots of ideas and best practices to share if they help. Reach out any time.

Want to increase Financial IQ of your Clients, their families and friends?

We can help. Please book a demo to discuss your needs and how our fully managed Financial Education programs can impact your business.

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Brendan Kenalty

Brendan is a recognized thought leader and advocate for Wealth Management firms using modern Client Communication and Financial Education as a growth engine for their businesses.

Though his involvement with ReachStack, Brendan works with Executives and Marketing leaders across the Financial Services industry to deliver digital content sharing programs that drive impact and positive ROI for Financial Advisors.

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