Von Aldo

Ignore the Offspring of Your HNW Clients at Your Peril

Prepare your clients' heirs to receive their inheritance; you'll have a better chance of becoming THEIR financial advisor instead of just being mom and dad's. Here are two facts that should scare any financial advisor: First, over 90 percent of heirs change advisors promptly upon receiving their inheritance. Second, 70 percent of those heir families lose their assets and family cohesion after receiving their inheritance.

The fact is, heirs feel this way: My rich parents' financial advisors aren't MY financial advisors. Industry numbers I have seen thrown around say only 2 percent of the assets that go to children stay with the parents' financial advisor. For a surviving spouse, the number is 45 percent. In short, heirs' inheritance isn't very sticky. Vic Preisser, founding director of the Instititue for Preparing Heirs, wrote on this for our magazine back in April. (Pressier's group offers near monthly symposiums on how to keep heirs nearly every month. The next one is scheduled for October.)

The first fact generates the question: “How do I develop a relationship with the families—the heirs—of my high-net-worth clients before the estate transitions? And secondly, you might ask yourself: “What corrective actions can I offer that will differentiate my practice from my competitors while improving the heir’s odds of success?”

In Asia, UBS and Citigroup, the two leading HNW firms in Asia, are preparing the children of their millionaire clients by putting them through private-equity and M&A like training.

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