Financial Advisors

Generational Planning – Advisor or Mediator?

Engaging and advising across generations is one thing – but engaging and advising across behavioral differences in the family unit is quite another.

There is no point in just adding different questions or exercises to the family review meetings; the key is to take a whole new approach to discussing generational wealth. And that approach is to first understand who each individual family member is -- at their core -- and on their own terms.

Easier said than done

As an advisor you need to recognize how to “know, engage and grow” different styles for delivering customized experiences.

There are two important keys to delivering advice across generations. The first is to get all the family members into the room at the same time. Again, easier said than done. But more important to the process is to reveal, know and understand the different personalities and how to manage them.

People react differently to the same life and market events. That in addition to knowing that what you say isn’t necessarily what your clients hear and understand. Constantly check each person’s interpretation of what you have advised, as each family member will hear it differently and have a different perspective

Expectations of these individuals will be quite different. As an advisor you will only be able to build trust across the generations when you can demonstrate you know how to manage their behavioral differences. In short, you understand them and their uniqueness.

Intergenerational advice will always be a tricky process, so focusing on building a relationship with the family as a first step will break down many barriers and pave the way to important aspects of estate planning.

Without understanding the individual behaviors, and how to manage them, you won’t be able to frame conversations. Neither will you be able to manage reactions to difficult conversations. Yet, when an advisor understands and manages their own behavior, they are more effectively positioned to understand clients’ holistic goals and needs and create strategies to grow and protect their wealth.

Imagine the diverse family unit

Imagine a common family scenario:

  • Father - takes charge, needs to be in control and not afraid to say so.
  • Mother – needs to be accurate. Wants to have her say and gather other opinions.
  • Son 1 – needs plenty of detail, choices, accuracy and time to think through.
  • Son 2 – needs to be free from detail, wants to get to know you, won’t like conflict.
  • Daughter – needs to set the agenda, initiate action, get to the bottom line, and have choices.

This is just one example of a real family dynamic. Imagine trying to advise them, balancing all the factors and doing so without some metrics to guide you.

How do I gain those insights?

You will be able to manage expectations and articulate strategies that will deliver value and manage succession planning, but only if you have the insight and skills to understand the behavioral differences and needs a family such as this brings to the meeting.

Remember, they probably won’t know their own financial personality. Understanding their propensity to manage risk is simply not enough. They and you need to have a much deeper understanding of a broader set of inherent financial behaviors, such as spending, budgeting, goal setting, planned giving, financial capability, decision-making biases. Then, once you know these behavioral patterns for each family member, it becomes about how they and you manage the different styles.

Many advisory practices are investing in scientifically validated data gathering to better understand their client’s behavioral differences. Without such tools advice planning is likely to be faulty and not reliable. Without these tools you are more likely to find yourself in a mediator role rather than a financial advisor role.

If you want to grow your business and have a significant point of difference, be the advisor who understands how to manage individual behaviors by going the extra mile to put in place and actively use a system that helps you better help your clients.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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Hugh Massie

As a Behavioral Finance Insights Pioneer and Identity Trailblazer, Hugh Massie empowers advisers, business leaders, families and individuals to unlock their identity in order to accelerate dramatic change and discover how unknown behaviors – which intensify through un-managed differences, money attitudes, pressure and emotions – derail performance.

Read Hugh's Bio