It was during a poolside conversation at an advice conference that CoreData Research global CEO Andrew Inwood said the penny dropped for an SMSF adviser. Most of his clients – certainly the wealthier more profitable ones – were about 70, the adviser realised, and if he didn’t take steps soon to engage with a younger generation of clients, his business was likely to die as his clients did.
“You might want to start thinking about that,” Inwood said he told the adviser.
“Otherwise, you’re going to be winding all these things up, and I’m sure that’s going to be valuable to the family, you’re going to help a lot.”
Speaking at the SMSF Association National Conference, Andrew Inwood discussed building trust with high net worth clients in volatile markets.
He said it’s important to think about considering the needs of the client’s children.
“Should their money be outside the [superannuation] system, inside the system? That’s the next wave and it’s really important.”
Inwood said the best time for advisers to engage with the children of older and wealthier clients is right now, if they’re not already doing it, but the best way to engage with younger clients isn’t the same as with older ones.
Inwood told conference that building trust with clients’ children takes time, that it develops differently from building trust with their parents, and that it will pay to involve them early in discussions with their parents about the family’s wealth and their parents’ plans.
“You don’t want to be meeting them at the point of death [of a parent],” Inwood said. “You want to be meeting them beforehand and having that conversation.”
Inwood said younger clients do not relate to wealth the same way their parents do, which means new advice models need to be created to serve their needs.
“They have different needs and challenges, and they think about things really differently,” Inwood said.
Typically, the first step in the advice process is for an adviser to engage with the client, then to review their situation, work out the advice job that needs to be done, develop a relationship, report on progress to plan, and enter an ongoing review stage.
But for younger clients, Inwood said, the first step of the advice approach must be to articulate the utility of advice services, clearly explain the range (or “stack”) of services available and create a relationship that way before focusing on providing them with a rewarding experience of working with an adviser.
“New models are necessary and the really, really important integer in this, that we’ve discovered though the research we’re doing, is that the first thing that you need to do to build a relationship with the next generation is focus on utility, which is [the value of] what you do,” Inwood said.
“Make sure that they really, clearly understand the utility that you provide, and that they can access it.
“The final thing is focusing on the stack, which is the levels or layers of service that you provide, because they’re probably not going to access all that, but they’re going to access some of it and you need to make that happen.”
Even though the relationship with a wealthy client’s children is likely to develop down a different path from the on their patterns walked, Inwood said the basic building blocks of trust are the same: competence, benevolence, integrity and predictability. Combinations of these factors builds both rational and emotional trust by the client in the adviser, and an effective relationship incorporates them all.
