If you are able to ask the questions but aren’t sure how to act on the answers, we suggest putting the responses in a “parking lot.” Write down the answers. Commit to helping the clients find a way toward solutions. This lets them know you will do your homework in those cases where the solution is not clear or when you aren’t qualified to take them down certain roads. At the very least, the conversation gives you a starting point and opens the door to a meeting with the next generation of the family. Then you can either introduce an expert in transitioning family wealth or locate resources within your own organization for support.
Anticipate Discord, And Prepare Your Clients For It
Be bold. Your clients are trusting you with their livelihood and their families’ well-being. You have seen failed wealth transfers. Don’t be shy. Tell them stories about the outcomes that emerge without proper planning. Help them see what they can’t see yet.
The potential discord isn’t always readily apparent. Here are eight clues to look for that suggest problems among family members:
1. When they are unwilling to attend family meetings.
2. When their participation at family gatherings is waning.
3. When you, the advisor, are caught in the middle, relaying information among family members.
4. When the family head is unwilling to talk to the others about the estate plan or expectations.
5. When siblings are jockeying for positions in the family business.
6. When there’s cordial hypocrisy—for example, when family members say they’re on board with your plan, but behind your back they are complaining about it.
7. When the family members don’t return phone calls or texts.
8. When the next generation has “failed to launch.”
As you see your clients’ success grow, make sure you leave them in the best possible position for their future generations to thrive, too. The payoff of playing to win is compelling when you consider the consequences of staying in your comfort zone.
The great differentiator in client retention is not portfolio performance, name recognition or even technical competence. It is trust. Competence and intelligence certainly play a role, but the third leg of that stool—the level of trust you have with your clients—is critical. It is what determines whether you will retain them and their next generation. Consider E*Trade’s warning: Of those clients who leave their advisors, 20% do it in the first year.
The great equalizer is always the relationship you have with your clients. In our experience, the advisor with the best client relationship wins. And the best relationships tend to emerge from difficult discussions.
Amy Castoro is the president and CEO of the Williams Group, which coaches families in succession planning and wealth transfer. The firm is based in San Clemente, Calif.