October 2022
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The Wealth Transfer Hype
One of the latest buzz topics in our mighty profession is ‘wealth transfer’. The migration of financial assets from one generation to the next, and what we as financial advisers should be doing to prepare for it. The advice is being peddled by the usual suspects who’ve never advised a family and who don't really understand what the elite adviser does.
The question that’s being accusingly asked is this: what are you and your firm doing to ensure you retain the next generation of clients when they inevitably inherit wealth from your current clients (through gifts or inheritance)?
They are not referring to the younger client who is both motivated and respectful of the value we can add to their life. The client segment they are referring to is currently young, broke, and full of financial misconceptions. They are not motivated and don’t have expensive questions that a caring, empathetic financial adviser can answer.
When considering how I should approach this group of potential clients, I always turn to other comparable businesses and wonder what they are doing. Are interior designers who currently work for wealthy clients who own mansions worried about servicing and building a relationship with the children of their current clients? Is the designer concerned about the client’s children employing another interior designer when they eventually inherit because they didn’t engage with them early enough? Of course not. They are serving their ideal clients now.
What are personal trainers doing? Your typical personal trainer serves 40-ish-year-olds who earn over £75k. These clients are motivated and have the means to pay £60 per hour for an accountability partner. For clients that tick these boxes, it’s like pushing an open door. They’re not going to personal training conferences worrying about how to attract more broke students as clients.
So back to the great wealth transfer hype. Who knows where the children of your current clients will end up being served? It may be at your firm, or it may be at another firm. But, when these clients receive substantial wealth and have expensive financial questions, they won’t be seeking answers from social media. They’ll be motivated to find a real human adviser in their quest for ‘help’.
Many have tried (and failed) to commoditise financial advice to reduce the cost of delivery. The only people this attracts are cheap people, and these people are to be avoided at all costs. They know the price of everything and the value of nothing. Your financial success will not come down to the fees you pay or don't pay, it'll come down to the advice you get or don't get.
I believe there are more than enough motivated families that need our help now; they are just about falling out of the trees. You can’t serve broke, unmotivated clients. Financial advice is a luxury product, and until we find a way to scale real personal advice, it will stay that way.
Business is difficult enough as it is. Why focus on high-hanging fruit on the off chance that they may engage with you when they become ideal clients? To me, it sounds like insanity.
Keep serving the clients that want your help. Avoid everyone else. Become laser-focused on the clients you serve and continue to shrink your circle of competence so it’s an inch wide and a mile deep.
Turn off the wealth transfer noise.
📰 Articles & Blogs
The value of personalized advice [27 pages]. The latest addition to Vanguard's research on the value of advice.
Four Guaranteed Ways to Improve Your Client Experience [6 minutes]. Wine is the same in a red Solo cup as in a Baccarat crystal wine glass – but the experience is so much different.
What Makes Life Meaningful? Views From 17 Advanced Economies [12 minutes]. Can 19,000 adults be wrong?
Communicating Value Through The "Jobs To Be Done" Framework [20 minutes]. Consider the specific outcome that the prospect wants from engaging with an adviser.
Don’t Believe the Pundits—Small Advisory Firms Will Thrive [3 minutes]. Focus on being good, not big.
🎧 Podcasts
TRAP: The Real Adviser Podcast: 4 - The Ideal Client Profile [62 minutes]. Our most heated episode yet...
The Psychology of Communicating and Delivering Advice with Dr. Derek Tharp [99 minutes]. The psychological insights advisers need to know to improve the communication and delivery of advice.
📚 Book Recommendations
Monetizing Innovation: How Smart Companies Design the Product Around the Price by Madhavan Ramanujam. Radically improving the odds that your innovation will succeed is just a matter of removing the guesswork.
👏 Encore
What Would Happen to You in a Book? [4 minutes]
The Power Of Using Checklist-Style Financial Planning [20 minutes]
13 Client Survey Questions for Financial Advisors to Ask in Year-End Reviews [5 minutes]
20 Timeless Lessons for Young and Old Investors [5 minutes]
