View more on these topics

Clive Waller: Why most advisers are wrong to target children of clients

A current theme among the financial planning community is that firms need to engage with the children of their clients. It is the sort of idea that is easy to support, but does it really make sense?

For years, most advisers have focused on the baby boomer generation. When I once suggested this was short-sighted to the delegates at an adviser conference, I was shouted down by very comfortable, BMW driving, 50-something males, confident 1 per cent on drawdown funds would keep them financially secure ad infinitum.

Regardless of the flaws in the 1-per-cent-fee-for-drawdown model, which I shall refrain from repeating here, it is obvious a business without a flow of new clients is not going to maintain its cashflow or sale value. That should cause concern.

Clive Waller: Contingent charging can only lead to bad advice

That said, any advice proposition should have a clear target market (RDR, Mifid II and Prod make this obligatory) and the children of clients will rarely fit into that. So, my worry is that the firm would be putting its own perceived prosperity ahead of a brilliant proposition for these children.

It might be helpful to look at clients by assets in order to consider whether their children could be suitable at some stage:

1. The uber-wealthy

This is where family offices thrive. Not many advice firms compete in this sector. However, multi-family offices are a legitimate move upmarket for those with very wealthy clients.

Others have the same needs, especially farmers and established family businesses, where the client has the nature and quantity of assets to naturally look to intergenerational transfer. In such cases, the family is the client. They would typically have assets in excess of £10m – usually much more.

2. Those whose wealth will outlast them

These are families where there is sufficient income guaranteed or assets such that, whatever happens (i.e. market corrections, long-term care requirements, etc.) a significant amount is still certain to be inherited. They would typically have assets in excess of £5m.

3. Clients whose wealth should outlast them

These are families where meaningful wealth will be inherited unless circumstances conspire – i.e. extreme longevity, prolonged long-term care need or significant market corrections. They would typically have assets in excess of £1.5m.

4. Those likely to spend most of their assets

The vast majority of retirees will spend all their savings. They simply do not have enough. Many will try to pass their last home to their children. Some will succeed; some won’t.

So, you want to engage with your clients’ children? If your clients are aged, say, 50 to 70, it could be between 20 to 40 years before children inherit. If the children are aged 25 to 45, it could be as much as 25 years before they fit your client proposition – assuming they ever do.

Tony Wickenden: Make sure baby boomers’ children are clients

As such, you will need a totally different proposition to meet the needs of younger folk who are borrowers, not investors, with needs for life insurance, income protection and mortgages. There are already firms that specialise in mortgages and protection. They might just be better at it than you.

There is then the huge issue of interest. Most young people are extremely unlikely to engage with their parents’ advisers, such is generational change. It may sound cynical but the only time most will be interested in talking to their parents’ advisers is when there is likely to be an imminent reward in their doing so.

If you intend to engage your clients’ children, make sure you have a proposition that genuinely benefits and suits them rather than one that is a desperate lifeline for the future health of your business. There may be more suitable opportunities.

Clive Waller is managing director of CWC Research



FCA: Advisers should be reporting bad practice

Poor conduct in the advice profession reflects negatively on both advisers and the regulator as it increases the level of mistrust between the two, says FCA co-director of life insurance and financial advice supervision, Debbie Gupta. Speaking at Money Marketing Interactive today, Gupta says the watchdog’s view of the industry is not as positive as […]


Quilter to add 400 advisers with Lighthouse acquisition

Quilter is set to grow its adviser base by another 400 advisers after agreeing a deal to buy national firm Lighthouse for £46.2m. Quilter’s network Intrinsic already has 3,500 avdvisers, including 1,600 restricted financial planners, and it is also the parent company of national Quilter Private Client Advisers. In a stock exchange announcment this morning […]


News and expert analysis straight to your inbox

Sign up


There is one comment at the moment, we would love to hear your opinion too.

  1. I couldn’t agree more with you Clive regarding this issue. I am in my early 50s and work with a slightly older principal of a firm that has been in existence for 25 years. As such many of the clients have grown older with the principal, so we are a specialist Later Life practice.
    We also have a few small Group schemes, which supply new clients on a fairly regular basis as older members retire. We get referrals of friends from our older clients, who strangely enough are also in our ideal age range of 55+!
    Finally, we do sometimes deal with children of clients who die and inherit, but as I am sure many other firms will find, typical wealthier clients of IFAs tend to have longer than average life expectancy, so many of these children are already clients as they are near or in retirement themselves!!!

Leave a comment


Why register with Money Marketing ?

Providing trusted insight for professional advisers.  Since 1985 Money Marketing has helped promote and analyse the financial adviser community in the UK and continues to be the trusted industry brand for independent insight and advice.

News & analysis delivered directly to your inbox
Register today to receive our range of news alerts including daily and weekly briefings

Money Marketing Events
Be the first to hear about our industry leading conferences, awards, roundtables and more.

Research and insight
Take part in and see the results of Money Marketing's flagship investigations into industry trends.

Have your say
Only registered users can post comments. As the voice of the adviser community, our content generates robust debate. Sign up today and make your voice heard.

Register now

Having problems?

Contact us on +44 (0)20 7292 3712

Lines are open Monday to Friday 9:00am -5.00pm