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Advisors overly optimistic they will continue to manage client assets for multiple generations

Brian Anderson

NEW YORK CITY –While many advisor-client relationships weaken with each passing generation, overall, a vast majority of advisors believe they will continue to manage at least a part of their client’s assets for multiple generations.

This according to new research released Nov. 1 by Everplans, an online estate and legacy planning platform, and Cerulli Associates, a global research and consulting firm that specializes in worldwide asset management and distribution analytics.

Of the more than 200 financial advisors surveyed, 90% believe they will continue to manage at least a portion or all of the assets once passed on to their client’s children, despite the fact that only 7% of clients’ children are currently established clients of an advisor.

“In a relationship-focused business, advisors must make time for building better relationships – not just better businesses,” said Everplans co-founder and co-CEO Abby Schneiderman. “Advisors inherently understand that they should be focusing on the next generation, but turning those good intentions into action is sometimes easier said than done.”

A vast majority of advisors (95%) have a relationship with their client’s spouse, but only two-thirds of their client’s spouses are clients of the advisor. Still, 75% of advisors surveyed remain confident that when their clients pass, spouses will keep assets with the advisor, even if they weren’t the primary client. What if the money is passed to a grandchild? Half of all advisors believe the assets will stay right where they are even though 92% of advisors are unacquainted or only quasi-acquainted with their client’s grandchildren.

“What we have here is a case of wishful thinking,” said Donnie Ethier, associate director, high-net-worth wealth management at Cerulli Associates. “Advisors today are under a tremendous amount of pressure – regulatory concerns, performance and returns, and just the general stress of running a business. These numbers should be a harsh reminder that while everyone is facing increased competition, it’s important to maintain your relationships if you wish to continue to grow your AUM.”

Communication critical

While advisors indicated that they do not routinely collaborate with the clients’ other advisors on estate planning documents (e.g., attorney, CPA), upon a client’s or a client-spouse death, more than 20% of their time is spent consulting/advising with other professionals. Similarly, 27.6% of their time is spent communicating with spouses and heirs to retain the inherited assets under advisement. After a death, it can be a time-consuming task to coordinate and organize their affairs. On average, advisors spend 16 hours compiling documents, consulting with other professionals, and distributing assets when an individual client passes away. The highest number of hours by a single advisory firm, as indicated in the survey responses, was 700 hours. For larger firms (with more than $500 million AUM), the time it takes to assemble key documents increases to an average of nearly 22 hours.

Advisors commonly document many aspects of their clients’ financial lives, including held-away assets (89%), mortgages/loans (79%) and banking/credit card information (55%). However, there are some topics advisors don’t routinely address as a part of their estate planning process but can be critical information for heirs, such as access to utility bills and digital accounts or details of funeral preferences.

Building new relationships

Some advisors have found the key to developing a business relationship with the next generation of clients is to simply ask. Nearly 70% of advisors ask their clients and spouses to get their children involved. Other top tactics advisors utilize to bridge the relationship gap include:

• 42% seek to involve future generations from the outset of the client relationship.

• 38% host informational sessions with children of current and potential clients, focusing on understanding and managing wealth.

Research Methodology: The research was commissioned by Everplans, the online estate and legacy planning platform, in partnership with Cerulli Associates, a global research and consulting firm that specializes in worldwide asset management and distribution analytics. The study was conducted from August through September, 2016 as part of Cerulli’s annual advisor survey. Asset information was self-reported by the respondents. Dedicated quantitative analysts reviewed all data for accuracy; survey analysts managed the distribution and data collection; and a survey review group ensured consistency and quality with all other Cerulli surveys. On average, advisors surveyed manage individual accounts of approximately $1.4 million with a minimum account size of $285,000, while the firms for which they work manage on average $1.1 billion in assets.

About Everplans: Everplans is the leading online planning and organization platform that helps people create, store, and securely share all of the important plans and information their family will need in the future. Through a combination of original content, a personalized guidance engine, an intuitively organized digital vault, and an enterprise platform for professionals, Everplans helps people create an estate plan that aggregates financial, health, personal, digital, and legacy information in one simple and accessible place. For more information, please visit www.everplans.com. Financial, estate and insurance professionals can request a demo of the Everplans Professional platform at www.everplans.com/professional.

About Cerulli Associates:Founded in 1992, Cerulli Associates is a Boston-, London-, and Singapore-based research and consulting firm specializing in asset management and distribution trends worldwide. Cerulli blends original research and data analysis to bring perspective to current market conditions and forecasts for future developments. Through its research publications, data platforms, custom research, and strategic consulting, the company provides financial services firms with guidance in strategic positioning and new business development. For more information, please visit www.cerulli.com.



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