If an advisory business has done its job properly for a client, then issues such as inheritance tax planning, life and critical illness protection and pension planning will all have been addressed in such a way that the client was happy and willing to have paid a fee for ongoing service and advice.
But what happens when one of life’s eventualities occurs and the client dies? Where does any inheritance go? How aware are any beneficiaries of the advice and service that has been provided by you and your firm? Are the beneficiaries even your clients? And do you have any influence over where the inheritance you have helped create or protect will be invested in the future?
More importantly, your client’s ongoing advice charge has died with them – how will your business replace that revenue stream?
You need to decide whether you are a true generational adviser, or whether you just give advice to the first generation.
Conversations about multi-generational planning begin with the first generation. However, true generational advice is all about the creation of an estate plan.
The success of an estate plan can depend on two factors:
• A good understating of the clients’ aspirations and goals.
• Whether the details of the estate plan have been properly communicated to family members or intended beneficiaries.
The key questions to ask are simple:
• What are the goals and objectives for the estate?
• How will any plan serve the family or other beneficiaries?
• Does the current financial situation match the estate plan?
When creating an estate plan and giving effective generational advice, it will be helpful to forge a strong alliance with the client’s solicitor. Both advisers and solicitors need to make the most of the opportunities available to them, which means looking at new ways to increase revenue and maximise profits.
As the primary purpose of generational advice is to tax-efficiently transfer family wealth, by openly discussing goals and objectives, you and your clients’ solicitors can strengthen relationships with your clients, their families and their beneficiaries.
This gives you the opportunity to ensure that the entire family are clients, and that you can continue to advise on the assets accumulated, with all generations benefiting from, and paying for, ongoing advice.
There are a number of excellent revenue-generating activities in generational advice:
• Reviewing the current estate plan to make sure it matches the defined multi-generational planning goals and objectives.
• Working with your client’s solicitor to agree how your client’s goals and objectives should be incorporated into the estate plan.
• Establishing a relationship with your client’s children to act as an advice resource as they experience life events such as buying homes or cars or going to university.
• Helping the family plan for educational costs.
• Protecting the family from the financial impacts of death or ill health.
• Preparing for or facilitating family meetings with other professionals such as their solicitor and accountant.
• Addressing goals that require charitable gift planning, such as gifting an overall percentage of the estate to charity or gifting a future lump sum.
Remember, you can charge for every one of these activities, which allows you to establish an ongoing engagement with each generation, as well as other professionals such as solicitors and accountants.
If you are in our profession for the long term, I would encourage you to consider generational advice to enhance your engagement with clients and to maximise your revenue potential.
So I would ask of all financial advisers: What can you do now to develop a generational approach in your client proposition?
John Joe McGinley is a principal of West Lothian-based Glassagh Consulting
