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Historically the relationship between Financial Advisors and their clients has been transactional in nature.And when it came to ‘knowing the client’, that knowledge focused on the means, sophistication and risk tolerance to determine suitability of recommended investments.The strength of the relationship between the transactional advisor and client is subject to the vagaries of the markets and the efficacy of the investments and allocations.
Times Have Changed
The advent of the Robo-Advisor has commoditized an important aspect of the transactional advisors’ value, and the introduction of the DOL’s Fiduciary Rule to act in the “best interest” of the client compels advisors to take a more holistic approach.In the years since the 2008 economic debacle the presence of the big wirehouses and their transactional focus has diminished, and the rise in independent wrap-fee and fee-only advisors has flourished.The fee-based advisors have taken to inferring that their compensation allows them to be ‘on the same side of the table’ as their clients but still leaves them subject to the whims of the markets.A New Era Has Arrived
We now stand on the threshold of a new era in the Estate and Financial Advisory Industry…. the emergence of the Transformational Advisor.To differentiate in today’s competitive financial services market, advisors must have knowledge and experience beyond their specific expertise, be that Estate Planning, Business Succession, Philanthropic Planning, Financial Planning or Asset Management.Transformational Advisors are now gaining an edge by working in a much more holistic environment wherein knowing the client expands to include familiarity with the client’s values system and life experiences.This combination of merging values with valuables helps the client and family preserve and pass on ‘all their assets’ and promotes greater intergenerational continuity.When clients experience transformational guidance, not only is a bond made and strengthened with that advisor but with regard to the client’s philanthropic leanings they become more impassioned and focused.Donations and endowments are tax-advantaged transactions that define the ‘who, how much, and when’ of the action, but not the ‘why’.When clients discover and embrace their values system, their philanthropic giving takes on a new meaning, and when successors know the story of the ‘why’ they will be more committed to perpetuating their philanthropic traditions."Wealth, divorced from the wisdom that create it, is too often wasted"When successors know the struggles and accomplishments that built the family wealth they are much more prudent with their financial inheritance.When they know the family’s values system everybody wins!Related: Will You Become a Legacy Advocate Before Your Competitors Do?A study by Forbes writer, Russ Allen Prince, found that when an advisor knows only three of a client’s core values, they obtain less than 50% of AUM and get no referrals.Knowing five core values begets 72% of AUM and 1.7 introductions.But when an advisor knows eight of their clients’ core values they are rewarded with 100% of AUM and 4.1 introductions on average.This study confirms why Transformational Advisors are enjoying new growth in their practice.Time for Legacy Talks
So how does one learn a person’s values system? The answer is by engaging in what we call a Legacy Talk.A Legacy Talk is a structured conversation with a client or prospect designed to elicit a client’s legacy stories and preserves those to benefit and guide future generations.This meaningful interview can have a profoundly cathartic result.Knowing how to start a Legacy Talk and asking the right questions….in the right sequence….is the key.Done properly, the client will experience an ‘aha’ moment as legacy stories emerge, and the value of those stories to the family becomes abundantly clear.It is in the telling of those legacy stories where the advisor learns the client’s values system. And it’s the genuine interaction that changes the client’s perception of the advisor from transactional to transformational.To add significantly more value, Transformational Advisors record the interview to memorialize the client’s wisdom, which presents an opportunity to deliver the recording in a follow up meeting with the client, relatives and heirs.Related: What Is a Future Ready Financial Advisor?Demand is On the Rise
Family elders want to pass on their values and life lessons.This was confirmed in on a survey of baby boomers and their parents conducted by the Allianz Academy of Legacies.
When asked to rank their inheritance priorities, by a factor of about eight-to-one they prioritize family stories and life lessons over financial assets.Yet very few have made provisions for this in a will or estate plan. If ever there was a time to engage in Legacy Talks with these affluent generations, this is it!