Offering holistic advice can improve an advisor's chances of retaining clients as they decumulate and centralize their assets.SDI Productions/iStockPhoto / Getty Images
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It’s a common story: as a client enters their retirement years and prepares to decumulate their assets, they downsize to one advisor.
The move is usually precipitated by two major factors. The first is a life change, whether that’s retirement, the sale of a business, a large inheritance or the illness of a spouse.
“They need to change the way they’ve approached their wealth management or investment management to date,” says Matt Langsford, senior investment advisor and portfolio manager at Canaccord Genuity Wealth Management Canada in Oakville, Ont.
In other cases, it comes down to convenience and simplicity at a time when drawing down assets can be tricky. “Income management is easier when it’s centralized,” says Phil Marion, managing director and portfolio manager at Foster & Associates Financial Services Inc. in Toronto.
Advisors looking to retain clients as they centralize their wealth management may need to offer holistic advice. That’s because clients have come to expect a family office style of service with experts specializing in wealth management, estate planning, tax advice and philanthropic guidance. This also means providing financial guidance for all of the client’s family members to ensure the smooth transfer of wealth.
“That’s what an advisor can make a case for: everything is together,” Mr. Marion says. “You need to have that model.”
Drawing a financial roadmap
The baby boomers have a lot of money to pass on; according to an Ipsos survey last fall for Sun Life Financial Inc., baby boomers plan on leaving an average inheritance of $940,000 to their children.
As a result, advisors need to think big picture in preparing clients for the wealth transfer, says Brian Burlacoff, a financial planner and partner with Financial Innovators Group Inc. at Sun Life Financial in Toronto.
“Advisors should be creating a financial roadmap, not just for the generation they’re working with but for all the generations that may follow,” he says. “That’s where advisors can show their true value, especially when it comes to holistic financial planning.”
Here’s how to become the natural choice for a client:
Invest in a team. Big wealth managers may tout their holistic offerings but few actually offer comprehensive integrated wealth planning, Mr. Langsford says.
“Anybody serious about wanting to be that sort of trusted advisor, who is in a good position to receive the bulk, if not all, of their client assets over time, needs to invest in their infrastructure and team.”
That team may include standby tax professionals, insurance advisors and philanthropy experts.
Ultimately, the advisors who anticipate a client’s needs, communicate effectively and provide a variety of offerings are well-poised to become the exclusive choice of that client.
“What ends up happening is the advisors who have structured their business in a way that they can be a one-stop shop tend to be the ones on the receiving end of the consolidation of the assets,” he says.
Involve the whole family. To avoid a “generation gap,” it’s key to involve spouses, children and even grandchildren in financial education and planning, Mr. Burlacoff says.
And advisors need to speak the language of these different generations, he adds. “It’s not enough just to include them – you have to include them in a way that speaks to their goals, to their objectives.”
The payoff, he says, can be long-term. “There’s no guarantee, but the more you work with the children and the grandchildren, you’re increasing your chances of being the trusted advisor. The family will look to you as the overall financial coach.”
Assist clients with decumulation. Centralizing financial management means it’s easier for clients to draw down their assets, says Mr. Marion – and something that should be conveyed to clients.
Advisors seeking to attract clients who are downsizing would be wise to reframe themselves as “transition experts” Mr. Langsford says: “We’re transition experts – we help transition the business or retirement.”
And clients can also save on fees when centralizing their financial planning, he says, “because there are quite a few redundancies if you’re dealing with multiple entities.”
Go the extra mile. Mr. Burlacoff likens the advisor’s role to that of a physician. “If you know your client really well, you’re going to know all the potential touch points where you should be following up with that client,” he says.
That may involve going beyond traditional guidance, such as connecting a client with a mortgage broker, an employment lawyer or a charity.
“When you do that, you distinguish yourself from the competition,” he says.
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