Monday, March 16, 2015

Retaining Clients through Generational Transition

          This short article from Financial Advisor magazine may appear to be insignificant in the big picture but exemplifies a serious and noteworthy problem in the representation of professional advisors in mainstream media publications.
Firstly, the article oversimplifies a complex subject which applies to most family enterprises, and secondly suggests that advisors incorporate multigenerational planning for the sole purpose of retaining clients or “assets” in the firm. Thirdly, it is not serving to contribute or uphold the professional standards of financial advising or family enterprise advising, and should instead recognize this area as a growing field.
The trouble with investment firms, generally speaking, is that they are focused on making money, which is not necessarily the same thing as working in the best interest of their clients. This story cites one of the largest investment firms in North America, and the reader must take this into account.
The article singularly suggests that advisors incorporate multigenerational planning into their practices in order to maintain assets and retain clients and their heirs. One could argue that many advisors, and family enterprise advisors in particular, are seeking to incorporate multigenerational planning into their discussions with clients for many reasons and would not initiate a discussion about generational transition for the purpose of retaining “assets” with a firm. A good family enterprise advisor working in the best interest of a client would already be in discussions with a client about wealth transfer, or would at the very least not begin the conversation about wealth transfer solely for the purpose of retaining a client.
The article says parents and children are reluctant to discuss family financial issues, which is not necessarily true. The real danger for family enterprises is that advisors don’t know how to adequately address complex family issues. The ultimate problem that could cause irreparable harm is that the advisor does not sufficiently understand family dynamics or how to navigate them.
The article says that “fostering this conversation is a way to build a relationship” – but negates to address the complexity of the family relationships which the advisor is about to wade into. As most designated family enterprise advisors would already know, the advisor wouldn’t aspire to be the trusted “family advisor” just to retain the family as clients but instead to help the family survive and thrive with the resources they have.


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