Rick Homuth, with Merrill Lynch International Private Banking, does not necessarily consider an individual’s wealth when assessing a client, but rather the “family wealth.” He added, though, that there seems to be a bit of mistrust by the current generation about whether its assets will be taken care of by the future generations.
“Whether related or not,” agreed Dan Dechant, “most generations are critical of each other.”
Homuth elaborated that many individuals feel the need “to control the family’s wealth from the grave.”
Fred Dunn noted that there are some hard facts that exacerbate the issue, like the fact that people are living longer on the one end and spending great sums for college on the other. For that generation caught in the middle, there are many hard decisions that have to be made.
“In many respects,” said Bruce Moore, a CPA with Deloitte Touche, “you have to deal with a family much like a business conglomerate. There are a lot of different interests and turfs to deal with.”
“There is certainly not a lot of communication going on between the generations about money,” affirmed Mike Gerken of Waddell & Reed. He described the process of getting clients to open up about intergenerational concerns as difficult but worthwhile.
“People don’t talk about money in their household,” affirmed Doug Lockwood. “It’s a problem that’s been in America since the beginning of time.” He and his colleagues try to reach out to the younger generations and help them think through their long-term goals.
“As I continue my practice,” noted Lori Gregory, an attorney with Lewis, Rice & Fingersh, “I need to be focusing more on the counseling and the mediating.” Getting to know the clients, especially their relationships with their children, is a challenge.
At the same time, however, Gregory finds that to be the most exciting part of the practice “because you’re really getting to the interpersonal struggles, the meat and potatoes of what people want and what they need to do to get it.”
“I think I should have had a degree in psychology or theology to do what we do,” said Tommy Taylor, an attorney with Shughart Thomson & Kilroy, “to do the various people things we are dealing with.”
“To me, one of the keys on this side of the business is remaining flexible,” said Jack Sutherland of Enterprise Bank & Trust. “Not trying to fit every client into a cookie-cutter solution. We have more and more clients who have unique needs and we need to be flexible and continue to focus on close contact to be flexible with them.”
“We spend so much time trying to make our industry interesting,” affirmed Gerken, “and what our clients want to know is that we are interested in them. When we manage to make that happen, when it works well, it is a beautiful thing to watch.”
Youth Will be Served
The question was raised as to who the client actually was in a multi-generational scrum. Said Don Hubbs, “I have decided my client is the person sitting in front of me and not their children.”
As a result, Hubbs has tried to encourage clients to find the joy in giving their money away now, while they are still healthy and alive. “It’s amazing how many clients experience that joy for the first time,” said Hubbs, “instead of stingily worrying about holding on to it.”
Steve Toomey had a different take. “If we as advisors don’t involve the children, when that money passes on we are not going to keep those people as our clients.” He and his colleagues have created educational sessions to get the kids involved.
“I am more optimistic than some of the other people in this room,” countered Dwayne White of the Country Club Trust Company. “I hear young people, 25-year-old people talking about should we do a Roth or an IRA? These are the kind of questions we had no dream of.”
Dan Dechant agreed that there were a number of ways for savvy younger people to invest, but there are also any number of ways for them to borrow. “I am shocked at the amount of people with debt amounts as large as some people have in assets,” he added.
“What, as an industry,” asked Scott Boswell, “can we do to work with clients, especially early in their wealth creation cycle in managing that aspect of their financial well being?”
(...continued)