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Five Ways to Familiarize Yourself With Your Client’s Family

If you want to keep the relationship, start building it now.

According to a recent report from Cerulli Associates, over the next 25 years $68 trillion is going to be passed from 45 million U.S. households to heirs and charity (that’s an average of about $1.5 million per household).

You’re probably not going to keep control of your current clients’ slice of that pie if your initial introduction to their heirs happens at the clients’ funerals.

It will benefit everybody involved if you initiate and strengthen your relationship with your clients’ family members right now. And a little effort will go a long way.

Getting to know them

As part of your regular reviews with clients, you should ask them about their children, grandchildren and other precious family members. Ask about the occupations of the adults, the schools of the college-aged kids, and the interests and activities of the younger children.

Don’t just nod politely as the clients tick off the names, ages and status of each person. Take notes so you can get a picture of each branch of the proverbial tree and bring those reference notes to each future meeting with the clients.

This is also a prime time to verify with the client that the current named beneficiaries of retirement accounts, annuities and life insurance policies under your oversight are in accordance with the client’s current wishes.

Be a resource

After you have a good handle on the client’s extended family, you can suggest to the client that you are willing to serve as an informal source of financial information for those members, even if they’re not officially your clients. Possible areas of interest might include helping a young adult child or grandchild develop a budget, invest in an at-work retirement plan for the first time or try to pay down student loans without starving. If the client lets you know that she has a new grandchild, you could offer to discuss the insurance and estate planning needs of the new parents, once the kid adopts a sleeping schedule that permits those parents to focus on these tasks. Other times you might counsel a client’s family member through the financial ramifications of a sudden job loss or, worse yet, the loss of a loved one.

In the meantime, make sure that the client and her family members know that this cursory guidance is free, confidential and creates no obligation on their part—especially if the conversation can be handled via a few emails or short phone calls.

Complementary accounts

One of the greatest ways to ingratiate yourself with all generations of a client’s family is to offer to help the children and grandchildren establish the accounts and invest the smaller amounts that normally don’t meet the minimums of an experienced advisor. These could be Roth IRAs for working teenagers or young adults, rolling small 401k balances from a previous employer into self-directed IRAs or assisting a new parent in setting up a 529 college savings plan.

Sure, you could charge a minimal fee on managing those assets. But the goodwill earned by doing the job pro bono could far exceed the few extra dollars of income you would otherwise pick up.

Best of all, once you set up these accounts you have not only an informal relationship with the family members but also detailed formal information (names, addresses, etc.)  required to open the accounts, which will further cement your place in their lives.

Becoming “real” clients

As the family members become older and (hopefully) wealthier, it becomes more likely that they will have the needs and the assets to merit your full services. If you’re serving the family via fee-based accounts, you should consider aggregating the family accounts when calculating the percentage rate you charge each account.

It’s crucial, though, that you keep information about each client’s assets and general situation confidential. Don’t share tidbits about money or lifestyles of one family member with another, even if you think you have implicit permission.

A gentle start to the transition

The longer your clients live, the more likely they will be unwilling or unable to handle the minutiae of their money matters. That’s when these preestablished relationships with the next generation can make your job (and their lives) easier as you all navigate through this unfortunate but inevitable circumstance.

Once you notice that the client isn’t as sharp as he used to be, you should ask if there is a family member that the client would prefer to have “help out with things.” Assuming he has one who is amenable and capable enough to be involved, you might set up a (hopefully re-)introductory meeting between you, the client and the family member.

It’s not necessarily required to formalize the younger family member’s ongoing involvement, at least not initially. You could start by cc’ing the family member in on emails, including her in three-way phone calls and having her at in-person meetings with the client, if possible. Make sure you take diligent notes on any conversations and correspondence with the client or other family members, in case there is some question later on as to how and why any financial decisions were made.

When it’s appropriate and approved of by your client, you could also periodically update the rest of the next generation on your client’s financial situation, in an attempt to ward off ongoing suspicion or later surprises. Eventually, the time may come when you have to enact a formal recognition of the younger family member in your client’s financial affairs. This will require the involvement of an attorney who may recommend establishing such tools as powers of attorney and/or a trust and trustee(s).

Last but certainly not least, if you haven’t already set up accounts for the beneficiaries to inherit assets according to the client’s wishes, better to do it while the client is alive and able to offer input. Then, when the time comes, you can devote more time celebrating your client’s life and legacy with his appreciative and welcoming family.

Kevin McKinley is principal/owner of McKinley Money LLC, an independent registered investment advisor. He is also the author of Make Your Kid a Millionaire (Simon & Schuster).

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