Advisors need to start setting up family meetings with older clients to make sure they maintain the assets they have and continue to grow them in future, according to Grant Shorten, director, strategic insights, Renaissance Investments, who spoke Wednesday at a Toronto event hosted by Renaissance Investments, a division of CIBC Asset Management.
Between 2012 and 2022 approximately 1.3 million transfers of wealth will occur between Canadians over the age of 65 and their beneficiaries, said Shorten, citing statistics from Investor Economics. The danger is that these assets are unlikely to stay with the current advisor once they are passed on to the beneficiaries.
“Only two per cent of all children will keep their inheritance money with their parents’ advisor,” said Shorten. “And that’s why I call this the black hole of wealth management.”
Advisors can avoid this black hole by getting to know the next generation a little better through well-structured and educational family meetings on estate planning.
Follow these five tips for a successful family meeting:
> Make a guest list
Talk with your clients to find out who should be invited to the meeting.
Shorten recommends inviting the appointed executor, and alternate executors, powers of attorney for property and personal care, beneficiaries, guardians (if there are small children involved) and any other family members who the clients feel should be included.
In most cases these people will all be the adult children or family members of the clients, said Shorten.
> Choose a format
The meeting’s format will depend on the family’s circumstances, said Shorten, but is likely to follow either an educational or open forum model.
The educational format generally takes the form of a family seminar or workshop while an open forum is a roundtable discussion between guests.
It’s also acceptable to incorporate both formats in a meeting, said Shorten. For instance, you can start out with a workshop and follow it with an open discussion where attendees can ask questions.
> Speak to the guests’ emotions
Address family members’ implicit reasons for attending the meeting right away.
Implicit reasons are based in emotion and have to do with the family members concerns or issues, said Shorten, such as having to face the inevitable death of a parent or being unsure about their responsibilities as an executor of an estate.
Addressing the guests implicit concerns during your opening remarks at the meeting will bring them closer to starting a business relationship with you in future.
“It’s essential to address emotional needs,” said Shorten “because people buy for emotional reasons and justify it with logic after the fact.”
> Break it down
Break meeting topics into short modules to keep the meeting content simple.
For example, you might start out with a section on estate planning, followed by a short explanation of the duties of an executor.
Shorten also recommends using any resources your firm may have on estate planning and to invite estate planning specialists to speak at the meeting.
> Ask for business
During your closing comments, talk with guests about the benefits of family consolidation and ask for their business in a respectful way.
“The most important portion, I think, of a family meeting,” said Shorten, “is positioning [yourself] as a family advisor, not just a household advisor.”