 Ninety percent of wealthy families lose their wealth within three generations, which means heirs make decisions that eat away at their inheritance. Multigenerational wealth management can help wealthy families see that the transfer of wealth from one generation to the next is smooth.
A multigenerational wealth management company helps clients create enough wealth to pass on to the next generation. The work continues because the firm then makes clients of the heirs, and so on, building and protecting wealth as it did for the original client. However, for heirs to become clients, the firm must engage them with the same effort as the original client while engendering their trust. In addition to retaining your client's heirs as future clients, the multigenerational wealth/asset management firm should prioritize client retention. While new client acquisition is integral to increasing their value, retaining clients is a more profitable way to expand their practice. A 1990 Bain & Company study found that if firms increased their client retention rate by at least 5 percent, they could increase profits from as little as 25 percent to as much as 95 percent, according to an April 2022 US News & World article. Leaders of multigenerational wealth management companies should ensure their employees understand how their clients relate to their wealth. Advisors can grasp their clients' relationship to money through financial behavioral analytics. Behavioral analytics studies how each client communicates exhibits with their advisor. This aspect of a multigenerational firm involves knowing how to talk to clients about taking care of money matters responsibly as a family. The advisor can take charge of conversations with their clients if they understand the person's relationship to money and communication style. The advisor must understand the client's communication style and relationship to their wealth and be able to communicate with the client's heirs. Younger generations, such as Generation Z and Millennials, are old enough to have witnessed many events. Still, many have only been alive to see the last major stock market event, the Great Recession of 2008. Many have yet to form ideas regarding money during regular economic activity. Additionally, investment tools have allowed younger generations to take the reins of their portfolios. Advisors should also be able to communicate the complexities of transferring wealth to heirs. In the case of a trust, policies related to tax benefits may prevent heirs from accessing money quickly. Multigenerational wealth/asset management firms should also try to remain current on the latest technological innovations. Integrating the newest technologies is essential for younger generations who are used to the convenience of accessing information from anywhere and at any time of the day. A firm that does not incorporate an online platform that provides clients access to financial information or other technological innovations risks losing clients. Finally, branding your firm is important to reach clients across generations. Carving out the brand for your firm will involve fleshing out your firm's niche or area in the financial services they serve. Further, each brand has a story behind it, and when facing the public, multigenerational firms must be able to communicate their brand story to clients across all generations. The brand story is integral to attracting customers and building the firm's reputation with clients across all generations.
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