To win business with clients’ kids, advisors really have to try

investmentnews.com:

It’s a prospect base advisors know all too well – clients’ children – and one whose business is not easily earned, so much so that many professionals don’t really try.

Less than one in five affluent investors say they work with their parents’ financial advisors, according to data published Tuesday by Cerulli Associates. Often, there’s nothing an advisor can do that will persuade a client’s child to hire them – but there are certain types of investors who are much more open to that than others.

While just 5% of those who work with their parents’ advisors identify as self-directed investors, nearly 75% of those who stick with their parents’ advisors say they are either reliant on advice or want more of it, according to Cerulli, whose survey between January and September included more than 650 responses from inheritors.

Further, the proportion of those who hire their parents’ advisors skews younger, with 41% of those under 30 who work with an advisor opting for it, compared with 31% among those 30 to 39, and 34% among those 40 to 49, Cerulli found.

“The younger gens that are the stayers … They are engaged. They want that help. And if their parents have an advisor, it can be seen as the logical first step for them,” said John McKenna, research analyst at Cerulli.

However, younger clients also tend to have different financial needs and preferences than their parents, which means that if the advisor can’t cater to them, they should find someone at their firm who can, McKenna said.

“If the matchup isn’t there, they’re going to start shifting their business elsewhere,” he said.

Advisors have to be OK taking time out of their day to work with clients’ adult children who may have less than $10,000 in an individual retirement