Your mom’s financial advisor wants to be your friend. Actually, he wants to be more than a friend. He’d like you to inherit him, along with your mom’s estate.
Advisors are worried that they’ll be left in the lurch when elderly clients die. Adult children often work with the advisor through the disbursement of the estate, then decamp to their own financial planner. Or just decamp.
Investment News, an industry publication, surveyed 544 advisors in April and found that 66 percent of heirs take the money and leave their deceased parents’ advisors. “Lack of relationship” is the No. 1 reason, cited by 30 percent of advisors surveyed.
Financial advisors would like to keep managing your deceased parents’ money, and that means converting you from your current status as third-wheel adult child to full-fledged client. So it’s important to understand why your business is so important to your parents’ advisor and how to navigate the conversation.
There are benign reasons to meet with your parents’ advisor.
Your parents’ advisor needs to at least be acquainted with you as part of their continuity plan. “If something happens to the parents, we want the family to know that we’re among the first to call,” says Jen Dawson, a wealth manager with Balasa Dinverno Foltz LLC, a Chicago-based advisory firm. “They need to know how to pay the bills and what next steps are.” And, of course, you need to be conversant in your parents’ estate plans.
And, your parents might believe that continuing with their financial advisor is part and parcel of a smooth transition — but what’s great for your parents may not be ideal for you, says Stephen Wershing, president of the Client-Driven Practice, a Rochester, New York, firm that helps advisors run their practices more effectively.
Just as your parents might consider a Cadillac the ultimate in driving comfort, and you prefer an SUV, it’s likely fruitless to try to change your parents’ minds about what defines a valuable advisor. Instead, recognize that different generations need and expect different types of services, Wershing says.
And, if the advisor’s practice consists largely of clients like your parents, he might not even be interested in adapting his services to you and your generation. “If you’re managing income streams for retirement, that’s different from managing a growth portfolio,” Wershing says.
Before you launch into a discussion with your parents’ advisor, be sure you have a clear understanding of what topics are covered by existing confidentiality and fiduciary agreements, says Avani Ramnani, director of financial planning and wealth management with New York-based Francis Financial.
“We make sure the clients understand the extent of information that will be shared, and we agree with them what information will be shared,” she says. With the parameters understood by all, you can freely ask questions.
“It’s often a moment of ‘decloaking’ for the parents to disclose to the kids the scope of assets,” Dawson says. This conversation can start with a general philosophy about how the parents manage their money and their plans for their estate. “Those conversations can happen without talking about numbers,” she says.
Know that the advisor may well intend to retain you at least within the firm, perhaps with a younger advisor. If you have less money on your own, you might be a better match for a younger advisor who is working with clients like you.
Or, the finanical advisor might want to transition you to a junior professional because you don’t have enough money to qualify as a potential client for a senior advisor whose clients have big portfolios. A good question to ask, he says, is: “If my parents were not in the picture, what services would you provide for me?” Wershing says.
Additional questions and considerations for an advisor who wants you to keep him:
— Ask the advisor how he communicates with clients like you. “The ideal response is, ‘How do you prefer to be communicated with?'” Wershing says. A flexible advisor can adapt to in-person meetings, email, phone calls, Skype or other digital means of communication.
— Ask the advisor if the internal game plan is to transition you to a different advisor within the firm, and if so, what level of service you can expect from that advisor.
— Scout out other advisors so you can ask your parents’ advisor what he or she offers that others don’t.
— Listen for how well the advisor discusses your goals with you, instead of assuming you share your parents’ assumptions about your lifestyle and aspirations.
Remember that the financial advisor will remain neutral and won’t be taking sides if a disagreement emerges, Ramnani says.
Finally, be sure you close the communication loop by discussing the advisor’s overtures privately with your parents, Wershing says. A good way to engineer this is to ask the advisor, in a meeting with your parents present, “What do you envision my role being, going forward?” and then ask the same of your parents privately.
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Why Your Parents’ Financial Advisor Asks About You originally appeared on usnews.com
