Money is constantly in motion and, for advisors; it is constantly at risk of walking out the door. What do advisors need to do to maintain the trust of clients and gain the trust of prospective clients? When a client’s wealth is in transition; advisors must have the trust of all potential benefactors of that wealth – whether that is a spouse or children. Advisors need to be proactive, ensuring that when someone finds themselves with new found financial responsibilities they understand the fundamentals of investing and the benefits of financial advice.
The largest intergenerational transfer of wealth of $1 trillion is occurring right now. With women living longer than men on average, widows are all of a sudden responsible for managing the family’s finances. Studies show that 70% - 80% of women change advisors once their partners pass away. Adult children 60+ are inheriting large sums of money from their parents and are unsure what to do with their new found wealth. Why would they stay with their parent’s advisors? Meanwhile, Millennials, between the ages of 24 and 39 have seen their net worth more than double from 2015 to $24 trillion US. (Ernst and Young). They are about to enter their prime earning years, their entrepreneurial spirit will accelerate their accumulation of assets, and they will eventually benefit from the wealth of their baby boomer parents. These are three different groups at risk and, through education, you have an opportunity to empower them to understand the benefits of investing and the benefits of your advice.
Back to basics: How to use the 5 Ws + How to educate your clients and their families, as well as prospects on the fundamentals of investing.
Why invest: The magic of compound interest
When to invest: Time value of money
What to invest in: Common investment products
Where to invest: Registered and non-registered accounts
How to invest: Diversification, Asset allocation
Who to invest with: Benefits of advice