According to the firm, 87% of investors are currently not using their parents’ adviser and 88% did not even consider doing so.
Additionally, among the respondents who received an inheritance, 36% said they transferred their funds to be managed with their already existing portfolio, 20% maintained a relationship with the same firm, and 19% turned to a different adviser or robo-adviser platform.
Establish contact early
On the basis of its findings, Cerulli is suggesting advisory firms reach out to their clients’ children in the early stages of wealth accumulation.
“By expanding its network to encompass the next generation, the practice not only increases its retention opportunity at the point of wealth transfer, but also creates the potential for referrals from the heirs whose peers may have assets in transition as they move between jobs in their careers,” said Scott Smith, director at Cerulli.
“While each of these interactions may not lead to immediate asset flows, building a pipeline of affluent advice seekers is an excellent opportunity to secure future clients.”
Focus on retention
Smith argues that waiting until an inheritance or wealth transfer is complete might be too late.
“By waiting to work with clients’ children until after a wealth transfer event, advisers greatly diminish their likelihood of retaining the assets,” he added.
“While these investors may not currently fit the practice’s targeted client profile, there is a very high correlation in wealth outcomes among successive generations.
“By combining personalised advice at periods of crucial need with digital advice tools, practices can substantially increase their ability to both retain current assets and attract new flows among the emerging wealth segment.”
Parents need to be open too
However, openly talking about wealth and inheritance planning could also help children make a more informed decision, whether that entails a specific firm, adviser or investment option.