Why Building Family Relationships is Essential for Client Retention

Money Management recently published an article highlighting a critical concern in the financial advisory field: the “great wealth transfer.” With trillions of dollars set to pass from Boomers to their heirs, this shift brings immense opportunities—and risks. For financial advisers, especially those unprepared to build relationships with their clients’ families, it may even threaten business continuity. The findings, supported by Natixis Investment Managers’ 2024 Global Survey of Financial Professionals, underscore that advisers who fail to secure the loyalty of future generations may lose the assets they’ve worked hard to manage.

According to the survey, 46% of advisers view intergenerational wealth transfer as an existential threat to their business. Of even greater concern, 43% are uncertain whether they can retain assets when passed to clients’ spouses or heirs. This should prompt advisers to prioritise client retention strategies focused on the whole family—not just the primary client. Natixis found that while advisers retain assets 72% of the time when inherited by a spouse, they succeed only 50% of the time with children. This gap reveals the significant risk of losing assets without established multigenerational relationships.

So, what can advisers do to prepare for the wealth transfer and ensure they’re positioned as essential partners for families? A key strategy is to treat family engagement as a central part of the advisory process, not an afterthought. According to the article, three-quarters of advisers recognise that fostering long-term relationships with clients and their families is critical for retention. By extending the conversation to heirs, advisers help build familiarity and trust, which can ease the transition when wealth changes hands. For advisers, this early connection with potential heirs is more than just a retention tool; it’s a way to secure the future of their practice.

The survey also points out that while advisers expect to grow their assets under management by 12.4 per cent over the next three years, they will need to onboard an average of 34 new clients annually to reach that goal. Although client acquisition is important, this statistic underscores that advisers should consider the value of existing relationships—specifically by extending their network to include clients’ families. Engaging family members proactively can offer a significant return on investment, as they are often more likely to remain with a trusted adviser than to seek someone new after an inheritance.

Advisers should also consider expanding their service offerings to address the needs of clients’ heirs. For example, the article mentions that 54 per cent of advisers provide family trusts, while 47 per cent organise networking events, and 33 per cent offer financial boot camps for next-generation clients. These value-added services create opportunities for advisers to connect with heirs, providing educational support and financial knowledge that will empower them to make sound decisions. Hosting events or offering financial workshops demonstrates the adviser’s commitment to building financial literacy and preparing heirs for the responsibilities of wealth.

There’s a strong case to be made for integrating family-focused strategies into everyday client interactions. By opening the door for family members to participate in financial conversations, advisers create an inclusive environment that strengthens ties across generations. Australian Ethical’s recent study supports this, revealing that 77 per cent of advisers who engage clients’ children in wealth discussions saw increased client satisfaction and greater retention of assets. Moreover, the study from Adviser Ratings indicated that a significant portion of clients are planning to transfer substantial wealth, with 14 per cent anticipating transfers of over $1 million. Given these numbers, advisers must make the effort to forge bonds with the heirs of such wealth, ensuring they remain connected to the practice during and after the wealth transfer.

One important final consideration is the time that this additional time it will take in engaging with clients to maintain the relationship to the next generation. Here’s where services like paraplanning services can be particularly helpful, in freeing up bandwidth for the planner to focus on relationships.

Ultimately, advisers should view this intergenerational wealth transfer as an opportunity to deepen relationships and expand their value to clients. While the primary focus may have traditionally been on the client, today’s advisers must be adaptable, understanding that their role should extend to the entire family unit. Through family events, educational sessions, and personalised conversations, advisers can build rapport with heirs and reinforce their presence as a long-term financial partner.

The great wealth transfer is more than just a change in who holds assets—it’s a call for advisers to evolve their practice and build lasting relationships. By proactively addressing the needs of both clients and their heirs, advisers position themselves to retain assets, strengthen client satisfaction, and secure the future of their practice.