Expert: Jon Hogg, Retirement Specialist and Tom Hawkins, Regional Manager, Facilitator: Martyn Laverick from Paul Harper M&A
Key Takeaways:
- Succession plans within the advisory business has an impact on Inter-Generational Planning
- The advice gap and capacity issues impact how firms address this
- Client segmentation is a key to a successful strategy
- One size does not fit all – different approaches taken by firms when approaching this topic
Context
Succession plans within the advisory business has an impact on Inter-Generational Planning
A fascinating debate took place between the attendees and contrasting views on the level of importance this subject took became clear. Firms that were looking for some form of exit or capital event in the next 5 years were not looking to invest in the infrastructure and technology that was felt was needed as the return would not be there in the right time period. Other firms, where the succession plans of the business had already been put in place and were looking longer term had made significant investments, especially around technology in order to engage better with the younger audience. This highlighted the different approaches firms were taking with the majority still not having formulated plans.
The advice gap and capacity issues impact how firms address this type of planning
Every attendee reported that business flows were very good and that many were having capacity challenges due to increased levels of new business from existing clients and new clients. This highlighted the fact that dealing with clients that may not yet have sufficient wealth such as the younger generations of existing clients was a challenge. Building in new services that helped engage with the children and grandchildren of existing clients was seen as extra work for little or no reward. Given the capacity pressures already felt by firms it was understandable why the implementation of formal plans around inter-generational planning was not widespread. However, there were examples where firms had invested in IT and this allowed a more cost- effective method of providing services to the younger, asset poor income ‘rich’ clients.
Client segmentation is key to a successful strategy
Understanding your client base and its make-up was considered to be key. Age ranges, assets, income attached to each age range, the ability to link children and grandchildren to clients were all requirements the attendees viewed as important. The starting point was to ensure that where the ‘client’ was a couple it was vital to engage with both people. Most firms stated that they always dealt with both husband and wife when planning and the majority of them felt that they would retain the remaining partner on death of one of them (broad stats stated that 62% of widows would change adviser). Where the company was looking to have conversations around inter-generational planning targeting the right clients where there could be a greater impact both for the client and the business was considered prudent.
One size does not fit all - different approaches taken by firms when approaching this topic
Attendees provided some very useful pointers as to how they had started to engage with clients and the wider family unit. Some started with using the Family Tree in the first meeting to capture details of the wider family unit and to start to have the conversation around the passing of wealth to the next generation/s. Others used IHT with existing clients to start to discuss the subject with clients which also included helping clients with probate forms. Lifetime Cashflow Planning was seen as a must have in this scenario in order to engage with the family unit effectively. Furthermore, some firms had started to offer financial education programmes for children of clients and where appropriate offered financial advice to the children as part of the fee structure/package.
