To win business with clients’ children, advisors really have to try

It’s a prospect base advisors know all too well – clients’ children – and one whose business is not easily earned, so much so that many professionals don’t really try.

Less than one in five affluent investors say they work with their parents’ financial advisors, according to data published Tuesday by Cerulli Associates. Often, there’s nothing an advisor can do that will persuade a client’s child to hire them – but there are certain types of investors who are much more open to that than others.

While just 5% of those who work with their parents’ advisors identify as self-directed investors, nearly 75% of those who stick with their parents’ advisors say they are either reliant on advice or want more of it, according to Cerulli, whose survey between January and September included more than 650 responses from inheritors.

Further, the proportion of those who hire their parents’ advisors skews younger, with 41% of those under 30 who work with an advisor opting for it, compared with 31% among those 30 to 39, and 34% among those 40 to 49, Cerulli found.

“The younger gens that are the stayers … They are engaged. They want that help. And if their parents have an advisor, it can be seen as the logical first step for them,” said John McKenna, research analyst at Cerulli.

However, younger clients also tend to have different financial needs and preferences than their parents, which means that if the advisor can’t cater to them, they should find someone at their firm who can, McKenna said.

“If the matchup isn’t there, they’re going to start shifting their business elsewhere,” he said.


Advisors have to be OK taking time out of their day to work with clients’ adult children who may have less than $10,000 in an individual retirement account – but that’s an investment in the relationship, said Lisa Kops-Wendel, president of Wendel Financial Group.

“I start getting into the relationship early, and the challenge is that we are like their parents,” Kops-Wendel said. “It does take time out of your day, but it’s a short-sighted view. You are working the relationship for the future.”

Some advisors said they work to build relationships with whole families.

“Our family-centered approach is integral to how we engage with our clients and their families,” Daniel Goodman, founder of Good Better Best Financial Planning, said in an email. “A key element of our strategy is encouraging each family member, from children as young as 8 to spouses who may not be deeply involved in financial matters, to identify and work towards their own financial goals.”

Another aspect of financial advice — inheritance planning — is critical to help family members keep more of their bequests, said Chad Holmes, founder of Formula Wealth.

“If you’re not thinking about the wealth transfer, you’re potentially missing out on tens of thousands of dollars due to unnecessary taxes,” Holmes said in an email.

He works with two generations of family assets for a flat fee, he said. “By working with two generations together, I help optimize my clients’ wealth over time with long-term planning. Assuming different tax brackets, we may make the parents pay more in taxes now with forced IRA distributions, because ultimately the total tax paid by the family is lowered when the next generation inherits after-tax money.”


It’s normal for people to want to change things up, meaning that they aren’t usually inclined to hire the people their parents have worked with, said Noah Damsky, principal of Marina Wealth Advisors.

“Kids don’t want their parent’s advisor — they want to pick their own … Their parent’s advisor probably isn’t a great fit for them because they likely have different needs and are at very different points in their lives,” Damsky said in an email. “Advisors have a good shot at working with the kids if they have a close relationship, but that goes for any client.”

Of course, having any chance of that requires advisors to put themselves out there, McKenna said.

“The children … almost overwhelmingly are not staying on with the parents’ advisors,” he said, but added, “The wealth of the millennial group is increasing substantially more than other generations … When you’re looking for clients, it’s such fertile ground.”

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