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Fans of college sports, particularly football in this era of name, image and likeness (NIL), are familiar with coach-speak that goes something like this: “One of my most important recruiting jobs was convincing (insert player name here) to stay.”
There’s a lesson in there for advisors and it’s easy to understand: in wealth management terms, the “player” you’re trying to convince to stay is an existing client’s beneficiary. In a perfect, beneficiary retention is automatic. A client’s spouse is named as the beneficiary of their investment accounts and other assets and when that client passes on, the spouse becomes a client, if they’re not already.
Adding to the ideal scenario is that the heirs – children, grandchildren, other younger relatives – will become clients when the older clients pass on. Of course, advisors know that client retention doesn’t always go according to plan. In fact, convincing beneficiaries to stay on after they’ve been bequeathed assets is comparable to working with fresh prospects.
It’s also not entirely on advisors to retain beneficiaries. Clients themselves should be talking with their beneficiaries about the benefits of working with fiduciaries – particularly the one that’s already in place. Unfortunately, data indicate clients aren’t having those conversations, meaning advisors need to initiate a conversation about a conversation.
Emotional Considerations Matter
On the surface, estate planning is analytical. It’s viewed as a task – an important one, but a task nonetheless. That perspective, while accurate, obfuscates the emotional component of one person sitting with another discussing their own mortality and how life will go on after their gone. It’s not easy to harness those emotions and that explains why many older clients are “emotional resistors.” That resistance can be a hurdle when it comes to easy conversion of beneficiaries to clients.
“These emotional resistors are a strategic opportunity for you to step into the emotional-relational aspects of your clients’ planning. In particular, this is an opportunity for you to help families have the conversations they want to have but don’t know how to start,” according to Fidelity.
The asset manager highlights other issues, including new model of client engagement that evolves the conversation beyond a client simply naming their spouse as beneficiary. Perhaps surprising to some advisors, beneficiary naming is an opportune time to lean on soft skills and display empathy while providing value for both the client and, potentially, the practice.
“Beneficiary naming is a great opportunity to connect more deeply with clients,” notes Fidelity’s Jonathan Habbersohn. “By adopting a Story mindset, we ask questions that bring the whole family into the conversation. And we help our clients toggle from putting a name on a line to thinking through the impact of the decision on the most important people in their life. It’s a good example of changing the relationship curve just by engaging differently.”
Embrace the Story
Storytelling is an underrated skill for advisors. It highlights your experience, values and humanizes you to clients. It’s a pursuit that’s also meaningful when it comes to beneficiary naming because clients want their bequeathed wealth to have meaning, also known as leaving a legacy.
That is to say when an advisor is helping a client tackle beneficiary naming, it’s an appropriate time to enter story mode, but in this case the storytelling belongs to the client. Think of it as building connections across a family’s various generations because all of those family members, not just a named beneficiary, stand to benefit from the transfer of wealth.
“The idea behind the Story mindset is that ‘Individuals and their decisions cannot be understood in isolation from their families,’” concludes Fidelity. “This is the core premise of FCFE’s Family Wealth System model, which highlights the interconnectivity of advisors, clients, families, and wealth decisions. This idea reminds us all that whenever a client is making a planning decision, it needs to be informed by both the client’s experiences and the experiences of those impacted by the client’s planning.”
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