WHO’S TALKING TO THE KIDS? - lfg talking to the kids.pdfBasic investing concepts 76% Financial...

©2016 Lincoln National Corporation LCN-1489735-050316

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For agent or broker use only. Not for use with the public.

WHO’S TALKING TO THE KIDS? Strategies to help grow your practice with multigenerational wealth planning

LCN-1489735-050316 For agent or broker use only. Not for use with the public. 2

Multigenerational wealth planning

1.Why clients need your help

2.Why you need to be involved

3.Strategies to engage the “next gen”

4.The connection to business succession

AGENDA


Why clients need your help

LCN-1489735-050316 For agent or broker use only. Not for use with the public.

An estimated $30 trillion dollars in wealth will be passed down over the next 30 years.

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MONEY IN MOTION

Accenture “The ‘Greater’ Wealth Transfer: Capitalizing on the Intergenerational Shift in Wealth.” Accenture. July 2012, Pg. 1. https://www.accenture.com/us-en/~/media/Accenture/Conversion-Assets/DotCom/Documents/Global/PDF/Industries_5/Accenture-CM-AWAMS-Wealth-Transfer-Final-June2012-Web-Version.pdf.

Skinner, Liz. “The great wealth transfer is coming, putting advisers at risk.” InvestmentNews. July 13, 2015. http://www.investmentnews.com/article/20150713/FEATURE/150719999/the-great-wealth-transfer-is-coming-putting-advisers-at-risk.

Multigenerational wealth planning is important for your clients’ families and for your practice.


THE DESTRUCTION OF WEALTH

70% of wealthy families lose their wealth by the second generation and 90% lose their wealth by the third Source: Taylor, Chris. “70% of Rich Families Lose Their Wealth by the Second Generation.” Money, June 2015. http://time.com/money/3925308/rich-families-lose-wealth/.


Why you need to be involved


High net worth providers: prioritization of family wealth planning and counseling services

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FAMILY WEALTH COUNSELING NEEDS ARE UNDERSERVED

Source: Cerulli, “High-Net-Worth and Ultra-High-Net-Worth Markets,” 2015. Pg. 118.

• There’s ample room for entry

• There’s still time to make inroads

• Barriers to entry are minimal


Percent of beneficiaries that leave their parent’s advisor after inheriting assets

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WHAT HAPPENS TO INHERITED WEALTH?

42% Will your practice be the exception?

Source: Cerruli, High-Net-Worth and Ultra-High-Net Worth Markets 2015. Exhibit 8.04 “HNW Providers: Reasons for Clients Leaving Firm, 2015, page 125.


Are you doing all you can to strengthen relationships with the children?

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YOU’RE NOT TALKING ENOUGH WITH THE KIDS

Source: Skinner, Liz. “The great wealth transfer is coming, putting advisers at risk.” InvestmentNews. July 13, 2015. http://www.investmentnews.com/article/20150713/FEATURE/150719999/the-great-wealth-transfer-is-coming-putting-advisers-at-risk.


AFFLUENCE SPANS GENERATIONS

*Affluent Households are households with $100,000+ in investable assets Source: Phoenix Marketing International, “U.S. Affluent & HNW Markets: 2015 Market Sizing Update & Millionaires by State Rank ing,” December 2015.


The advisory needs of Gen Xers and millennials are still in their formative stages

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INVEST IN THE FUTURE OF GEN XERS AND MILLENNIALS

*Affluent Households are households with $100,000+ in investable assets Source: Phoenix Marketing International, “U.S. Affluent & HNW Markets: 2015 Market Sizing Update & Millionaires by State Rank ing,” December 2015.


Strategies to engage the children


1. Get proactive by meeting with the children more often.

2. Try different touch points to learn their preferences.

MEET EARLY AND MORE OFTEN


Your client base may look good now, but what about in 10 years?

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THE IMPACT OF AN AGING CLIENT BASE

Client age Among all advisors

<40 8.1%

40 to 49 14.8%

50 to 59 26.5%

60 to 69 29.0%

70 to 79 15.8%

≥80 5.8%

Source: Cerulli, “Advisor Metrics: Anticipating the Advisor Landscape in 2020,” 2015, pg. 164.

Percentage of client base: Under age 40 = <10% 60 and over= 50%

A better balance leads to a healthier practice


Importance of educational topics for clients’ children

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WHAT TO TALK ABOUT WITH THE CHILDREN?

Topics All HNW providers

Basic investing concepts 76%

Financial education 70%

Wealth preservation 45%

Family governance/values 29%

Philanthropy & social responsibility 20%

Advanced investing concepts 11%

Safeguarding privacy 6%

Source: Cerulli, “High-Net Worth and Ultra-High-Net-Worth Markets,” 2015, pg. 128.


Educational topics preferred for clients’ children

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Basic investing Financial education Wealth preservation

#1: Basic investing concepts 76%

Content examples for young adults

• What are stocks? What are the categories (i.e., growth vs. value) and what do they mean? What are large cap/small cap categories?

• What are the major exchanges and the purpose of each?

• What is a bond? What types are there? How are they used?

• How do interest rates impact bonds?

• What is an annuity?

• What is a mutual fund?

• What is a portfolio?

• What is asset allocation? What does diversification mean?

• What does it mean to buy low, sell high?

• What is a time horizon? Source: Cerulli, “High-Net Worth and Ultra-High-Net-Worth Markets,” 2015, pg. 128.





#2: Financial education 70%

Content examples for adolescent teens

• Income – sources at various ages in your life

• Budget – purpose and how to create one

• Importance of saving

• Relationship between insurance and life events

• Home values/mortgages

• Time value of money/compound interest

• Risk versus return

• Inflation

• Purpose of an emergency fund

Source: Cerulli, “High-Net-Worth and Ultra-High-Net-Worth Markets,” 2015, pg. 128.





#3: Wealth preservation 45%

Sample topics for young adults and older

• How do you set goals and plan for the future?

• How are your 20s critical to establishing your own identity and preserving wealth?

• What is a legacy?

• Why does wealth often disappear by the third generation?

• How can insurance be used to help protect wealth?

• How does money create empowerment?

• How does having money impact relationships, friends, others?

• How do you set spending priorities? Sharing priorities?

• How do you balance the responsibilities of wealth with personal/family life?

• How do you define your values?

Source: Cerulli, “High-Net Worth and Ultra-High-Net-Worth Markets,” 2015, pg. 128.


• What information are you missing?

• Can a survey fill in some blanks?

• Are you confident you’re focusing on the right needs?

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HOW WELL DO YOU KNOW THE CHILDREN?


Children of clients by age

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HOW WELL DO YOU KNOW THE CHILDREN?

Family Adolescents &

younger Pre-college/

college Young adults

post college 20’s Ages

30 – 40 Ages 40+

Abbot Brad Joyce

Chin Janice

Eggers Lloyd, Lauren

Goldberg Jay, Jon

Kincaid Carly David

Mann Gayle, Steven

Roberts Jeffrey, Rebecca, Justin

Sanderson Richard, Randi Lynn

Van Ness Misty Dan

Family Adolescents &

younger Pre-college/

college Young adults

post college 20s Ages

30–40 Ages 40+

Abbot Brad Joyce

Chin Janice

Eggers Lloyd, Lauren

Goldberg Jay, Jon

Kincaid Carly David

Mann Gayle, Steven

Roberts Jeffrey, Rebecca, Justin

Sanderson Richard, Randi Lynn

Van Ness Misty Dan


Suggested topics

• Basic investing topics

• Establishing credit

• Internships, job interviewing and basic career networking

• Volunteer work and charitable causes

Topics specific to sophomores, juniors and seniors

• College selection

• College visits

• College applications

• Summer programs and internships

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TARGET FOCUS: PRE-COLLEGE & COLLEGE STUDENTS


• Student loans, establishing credit and debt management

• Budgeting, cash flow, setting-up bill pay, credit cards

• Saving for a down payment

• Purchasing a home

• Building an emergency fund

• Protecting from unforeseen events

• Setting up and investing in retirement accounts

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TARGET FOCUS : 20–30 YEAR OLDS


• Consider when, where and who is coming

• Be adventuresome, experiment and make it fun

• Focus on things the children may have in common

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INFORMATION SESSION BASICS


Face-to-face events

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FAMILY WEALTH ENGAGEMENT IDEAS

Appreciation/ networking events

Education Retreats/third party

opportunities

Craft beer tour/ tasting

Workshop followed by refreshments

Wharton Institute on Wealth

Museum—private tour with reception

Professor presentation: “Entrepreneurism”

Operating a foundation— site visit/panel discussion

Sailing day trip Meet the author

Workshop followed by a dinner

Charitable trip/ mission


Digital and remote tactics

Establish an online presence

• Email: to communicate and distribute newsletters

• Website: to provide useful information and tools

• Social media: to “humanize” yourself

- Use Facebook to stay up-to-date and connected with your client network

- Use LinkedIn groups and pages to enhance your professional, outward digital appearance

- Pinterest is a great place to create a dream board for financial goals

- Twitter to be top of mind or to share relevant articles

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FAMILY WEALTH ENGAGEMENT IDEAS


Themes

• Long-term care planning

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FAMILY WEALTH MEETING



Themes

•

• The responsibilities of wealth and establishing a purpose for family wealth

- Recordkeeping, including living wills, account log-ins, insurance, investment information, trust documents, income strategy to and through retirement



Themes

•

•

-

• Business succession

Business succession is an ideal way to gradually get to know the children in the business and earn their trust.


• What kind of interest will the children show once a proposed sale is on the table?

• Fill the void in business succession planning

- Help business owners develop a formal plan

- Use your client insights to propose possible transition scenarios

- Play an integral role in helping them work through the issues

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BUSINESS TRANSITION PITFALLS


How a “next gen” focus and advisor succession plans are complimentary


• Expand the role of younger advisors on your team

• Hire a junior advisor from outside the firm

• Send a message to the children that you’re committed to their future

- Benefits include additional flexibility and targeted skills to:

• Focus on the needs of the adult children

• Introduce younger adults to the investment process

• Expand your use of technology and self-serve tools

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STRATEGIES FOR SERVING THE NEXT GEN


A multigenerational focus can be a win-win for clients and your practice

• It benefits clients

• It gives junior advisors a financial foothold in your practice and their future

• It can pave the way for your gradual transition and a lucrative sale

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SUCCESSION STRATEGIES


Most important attributes when evaluating an acquisition*

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WHAT MAKES YOUR PRACTICE ATTRACTIVE TO BUYERS?

*according to independent advisors Source: Emily Sweet, “Challenges Facing the Next Wave of Retirees,” IMCA® Research Quarterly, Quarter 2, 2016, pg. 6.

Highly important Important Somewhat important

• Revenue mix (e.g., advisory recurring, non-advisory recurring, brokerage)—74%

• Age of clients—73%

• Size and concentration of clients (e.g., diversified mix of large balance clients)—71%

• Seller’s investment and planning philosophy—64%

• Produce mix (i.e., the mix and type of products sold)—59%

• Tenure of client relationships—58%

• Regulatory record—52%

• Other (less than 50% mentions)


• It’s never too late to adopt a multigenerational planning approach.

• Will you provide family wealth counseling and planning services?

• There is risk involved with no guarantee of success.

• Help is available to minimize the risks.

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GETTING STARTED TODAY

Look at your book Engage with your clients


QUESTIONS

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THANK YOU

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Not insured by any federal government agency

Not guaranteed by any bank or savings association

©2016 Lincoln National Corporation

Lincoln Financial Group is the marketing name for Lincoln National Corporation and its affiliates. Affiliates are separately responsible for their own financial and contractual obligations.

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Lincoln Financial Group is the marketing name for Lincoln National Corporation and its affiliates, including broker-dealer/distributor Lincoln Financial Distributors, Inc., Radnor, PA, and insurance company affiliates The Lincoln National Life Insurance Company, Fort Wayne, IN, and Lincoln Life & Annuity Company of New York, Syracuse, NY. Affiliates are separately responsible for their own financial and contractual obligations.

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