In the Advisor's Emotions section from the April issue of On Wall Street magazine< >, columnist Denise Federer focused on how advisors should prepare for a family meeting. The issue came up again SIFMA's Private Client Conference on Thursday at a session on intergenerational wealth transfer. Executives from Edward Jones, Fidelity and Merrill Lynch shared their strategies to having an effective family meeting that will keep everyone together and help the advisor keep favor with younger generations. With all the anticipation of a large transfer of intergenerational wealth, a lot can be at stake for advisors presiding over high net worth clients at these meetings.
"By being fully engaged in this essential role you can occupy a unique niche for your key clients," Federer wrote. "Incorporating this essential service into your practice allows you to not only create loyal advocates of your current clients, but potentially to gain their children as clients and retain the family assets."
Click through for a rundown of some of the top tips for planning for and executing a successful family meeting:
1. Coordinate to Establish an Agenda
-Don't make it too elaborate, says Eric Williams, director of personal wealth and retirement at Merrill Lynch. Many advisors get caught up in trying to address too many or too specific of issues.
-Keep it simple and leave room for discussion by creating a broad framework for the optimal development of family interests, Federer says
-Establish a procedure ahead of time for which numbers will be disclosed, Williams. Speak with the family member currently controlling the most assets about how much detail the children should know or if they should just be educated about the process of inheritance, for example.
-Spell out the maximum length of time for the meeting, Federer suggests.
Schedule around major event - a death in the family or selling of a business are important times for the advisor to schedule a meeting, according to Jeffrey Jeznach, managing director of Private Wealth Management at Fidelity. Be quick to have a plan in place in case of an unexpected death and meet with other members of the immediate family and bring in an estate planner to make sure the family is aware of the process for settling the estate.
Don't just go meet then where they are or in their home. Find a unique place, Williams said. Also, consider holidays. If they are going skiing around Thanksgiving, for example, it might be a good time to meet with them in that location, especially since all the family members are likely to be present.
4. Keeping the Peace
It's important to know what you're getting into before the meeting starts or if you need to bring in some outside counseling. Williams suggests a kind of ranking system from green, yellow and red.
Green is for families you have dealt with together for 3 to 4 years. Yellow are situations where the family dynamic is dicey but you know them well enough. Red is a case where there may be a contentious issue such as a divorce and you should have a mediator.
5. Sustaining family values
Federer suggests this is a good time to impart values on the next generation. One way to help sustain those values and to start working with the next generation is to give the children a piece of the wealth to invest in a charity, according to Jeffrey Jeznach, managing director of Private Wealth Management at Fidelity. There are several online options for grant making that can would appeal to the younger tech-savvy generation, he said.
6. Create a plan of action with a followup for each topic
The goal is to identify the unique issues that are critical to each person's emotional and financial well-being, Federer said. Ask each individual what is important to them and that will help you understand that everyone gets a voice and understands their role.
7. Be prepared to Answer Questions
If you're in a meeting where wealth is being inherited, younger generations may be skeptical and may want specific answers as to the numbers and investments behind the accounts. Most children will follow their parents' lead but they also want to know the reasons why, according to Williams.
"You have be kind of comfortable with going tot through process of now engaging and really talking about all the little bits and pieces," he said. "Once they get that they're likely to stay and consider the process."