Building Wealth Management Relationships for Family
More often than not, wealth management extends beyond an individual. When selecting a wealth manager, it's important to look for a relationship that supports your financial goals and your family's goals. Such relationship-building should be instrumental to your wealth manager's approach to serving you and your family.
Beyond the Client
Wealth management is rarely about just an individual. Financial goals often include, or even emphasize, care for family members (children, grandchildren, parents). While wealth management relationships begin with the client, over time, the next generation often gets brought into the fold, and children transition from proxies of their parents to clients themselves. For wealth managers, this presents an opportunity to partner with the next generation and to engage with them directly in advance of this shift. This approach not only serves clients but offers a valuable benefit to the next generation. It can be difficult for younger people [with less substantial assets] to gain access to a wealth manager early in life, so access via association offers a chance to receive valuable insight. It also opens the door to forming a new and lasting relationship and allows the wealth manager to better prepare the younger generation for a potentially substantial wealth transfer down the road.
The Next Generation
Because most clients are also concerned about their family’s welfare, many financial goals include familial considerations. A good wealth manager will help meet these goals by working with the client and engaging with their family directly.
Before the formal beginning of the relationship, there are key times a wealth manager may have contact with the next generation or, at the very least, address them within the financial planning process. This might be when setting up a 529 plan in preparation for college, in the aftermath of a major life event, or at a milestone like entry into the workforce. While we help our clients prepare for these events, we also may bring their children into the conversation at these moments.
Good Financial Habits
One major benefit a wealth manager offers is imparting knowledge about establishing healthy financial habits. Of course, successful people often pass along good habits to their children, and some habits already exist. However, this is not a given as many children may not want to hear advice from their parents. A neutral third party can serve as a helpful “echo chamber,” reinforcing universal principles that lead to financial success. By helping impart these good habits early on, a wealth manager can also set a good foundation that paves the way for a financially positive future.
Initial touchpoints with the next generation often occur around major life events, and it’s possible one such event will dictate the beginning of the relationship. These milestones – applying for college, entering the workforce, or navigating employee benefits, for example – often provide natural openings. While the way in which we forge relationships varies from client to client, the process often starts with an informal discussion. While we already know the “kids” through conversations with their parents, we may not have had the chance to interact directly. Once an initial outreach is made, we set a meeting one-on-one. This allows them to speak freely and helps foster a personal connection. It’s essential to remember that the family member is a distinct and separate client – and household – and requires a distinct and separate relationship from the parent. Certainly, there is a high value on confidentiality in each relationship.
Generations are not clones of one another, and goals and motivations vary greatly. As wealth managers, we are not trying to replicate the parent in the child. If good financial habits are in place, of course, we reinforce those, but we recognize that each client has a different definition of financial success. Values also vary between individuals, and it's our role to serve the next generation uniquely by tailoring our guidance to the individual and their unique characteristics and goals.
Role of a Wealth Manager
For many people, passing down wealth is a key priority that impacts their overall financial goals and plans. A wealth manager can be instrumental in helping to optimize your wealth to ensure your needs – and those of your family – are met in the most effective manner possible. At Richard P. Slaughter Associates, we understand this financial "cycle of life" and place a large emphasis on working with our clients and those closest to them, who, in turn, may become clients themselves.