A report by SEI Private Wealth Management and the Scorpio Partnership found that millennials with money are opting to use the services of an individual wealth professional rather than a firm. It is thought they perhaps prefer the personal touch and the one-to-one relationship.
This means that those individual advisors might be set to make a little more as generation Y continues to rise and earn their money. While generation X still prefers the security of firms as opposed to individuals, there will of course still be a need for such bigger firms - it just might be that as time goes on individual advisors become the most in demand.
Chet Brothers of Brothers & Company Financial says the personal touch is important but in order to provide extensive knowledge and services, more than one person is needed.
“People really do want personal connections regardless of their age. We very much take an individual approach to each client and have a personal relationship with each. The larger support team exists in the background and acts as a resource. It is impossible to be an expert in every aspect of personal finance so a deep source of subject knowledge and research is critical in delivering our advice.”
The report also found that family disputes are the biggest hurdle when it comes to achieving financial goals and that working through financial decisions in isolation can contribute to diminishing a family’s funds over time. With this in mind perhaps advisors should enter in a little life coaching and encourage clients to iron out any family conflicts and work on communicating with others so they don’t feel alone when tackling their finances.
Jason Abbott, president of Wealth Designs, a financial planning firm, said understanding what’s been left in a will is an important factor. This is a complex situation that can lead to ongoing disputes and stress surrounding finances if there hasn’t been communication.
“If there’s insufficient communication, heirs they won’t under the reasons why things were left the way they were. This can lead to significant disputes which often go to courts and consumes much wealth paying for lawyers.”
He also highlighted other social factors that can cause family disputes over money such as differences in spending.
“Some people live modestly despite a surplus, viewing wealth as a resource to be used responsibly. Other family members i.e. their children might be spendthrifts who can’t keep a dollar in their pocket.”
The study called “Breaking The Taboo” looked at 275 individuals averaging $18 million in assets and $616,000 in annual income and their attitudes toward finance management. It found that 43% of participants said family interference stops them from achieving financial goals.
It also found solutions to the problems that hinder wealth management. They found that engaging more often with family members to end conflict, introducing heirs to the decision-making process at a younger age and making joint decisions would decrease the chances of wealth disintegration.
If we encourage families to integrate their older children into the decision making process they may be better prepared to deal with their own finances and communicate more openly about them in the future. This would help individuals to reach their financial goals.
Setting goals, teaching children about money and getting family involved in important decisions might lead to a generation better equipped to deal with wealth and more likely to hold onto it.
Get telling your clients that the trip to the financial planner’s office is now a family one.