There is a lot of work to be done by firms and individuals to manage the great wealth transfer process that so many expect to see take place in the years ahead. The author of this article examines some of the pain points and opportunities.

Ink and pixels have been spilled over the vast sums due to be transferred by the Baby Boom population to subsequent generations. There are a lot of clichés about "inter-generational wealth transfer", about the habits and desires of Millennials and Boomers, and no doubt readers must be growing tired of reading and hearing about them. But getting some of the details right is clearly important. The sheer scale of what is in play means no wealth management figure can afford not to grapple with the details. With that in mind, here are thoughts of Richard J Henry, senior vice president and managing director for the Philadelphia and Delaware markets of Hawthorn, PNC Family Wealth®. The views are those of the author and not necessarily shared by the editors of this website. However, this news service is pleased to share such contributions and invites responses. Email tom.burroughes@wealthbriefing.com

Over the next few decades, family offices will have to help navigate their high-net-worth and ultra-high-net-worth clients through the largest wealth transfer the industry has ever seen. As boomers age, they will begin to pass their considerable wealth to their children, heirs and charitable organizations of choice.

This transfer of wealth has created an unprecedented level of planning that requires constant communication and collaboration among the brightest minds in the industry. And this extraordinary event is occurring at the same time the financial industry as a whole is facing a shortage of advisors. Consulting firm Moss Adams forecasts a shortage of at least 200,000 advisors by 2022.

At Hawthorn, PNC Family Wealth, we are not seeing as much of a shortage in young professionals who want to enter the industry on the investment side, but we certainly see a gap in specialty functions like fiduciary administration.

As with the Great Wealth Transfer, preventing further attrition and improving advisor recruitment and retention will require significant amounts of planning and careful execution.

Because of the depth of planning that comes with the Great Wealth Transfer, it is critical to not only actively engage clients early in the process - usually the matriarch and patriarch of the family and their legal and tax advisors - but also to make an effort to build relationships with the next generation, depending on the level of wealth.

The relationship with the client might be going swimmingly - up until the wealth transfer, when the next generation might be inclined to hire their own advisor and do things differently.

However, we’ve found that consistently inviting new professionals to meetings - especially those at which we know the next generation also will be present -  helps develop a relationship with the client’s children and grandchildren. There’s a certain level of comfort that comes with seeing advisors of all experience levels  who speak articulately and with authority about your family’s personal situation, so we encourage our advisors to develop their own rapport with not only the client, but also with their heirs.

Furthermore, we find that this provides the existing client with a sense of relief, as they feel comfortable that their children and grandchildren are part of the conversation, have their own trusted advisor within the broader team and have a vested interest in the process and the outcome.

The junior advisor not only helps us retain accounts despite wealth transfers, but we also are simultaneously and organically growing our own talent and exposing them to the benefits of working in the financial services industry early on in their fiduciary career.

Perhaps there is not an opportunity to assign a new advisor to a client account, but are there specific assignments they can work on and complete? The key is to ensure the finished product isn’t just turned over to an experienced professional to take credit for. We let the new talent present his or her work at the client meeting to allow them to exercise the muscle of presenting in front of a client.

Of course, we also strive to give the new professional selected accounts. For instance, some new advisors are assigned responsibility for the grandchildren’s accounts of a client. They are managing the money themselves and developing critical skills that will serve them well down the road, but as part of a broader client strategy. There also is the additional benefit of oversight from a seasoned professional.

Speaking of more seasoned advisors, another benefit to this approach is the senior advisor has the ability to delegate responsibilities and smaller account management to the junior team member, allowing the seasoned advisor bandwidth to focus on higher priority tasks and assignments.

While Hawthorn is always actively recruiting talent of all skill sets, we do find that cultivating our own talent at entry level helps with retention and quickens the time it takes for the advisor to transition to greater and more complex assignments.

That’s not to say that all of the talent you recruit, train and offer a seat at the table will stay with your firm for the duration of their careers, but at the very least, you are actively trying to solve the advisor shortage and contributing to the greater good of the industry.

To summarize, the industry can kill two birds with one stone - plan for the great wealth transfer and combat the coming advisor shortage - by proactively creating programs to cultivate talent and then give them a hands-on role in client accounts.

Leadership will find that giving new advisors meaningful roles in client facing service will help them hone their skills, and management will be better able to match talent to specific positions, especially in areas where the pipeline might be lacking. Your firm also will have an easier time retaining large accounts over the long-term, even after the wealth transfers to the next generation.

All of this certainly requires a lot of work, planning and time, but it benefits everyone involved: firms, clients, seasoned staff and especially new recruits.

The PNC Financial Services Group, Inc. (“PNC”) uses the marketing name Hawthorn, PNC Family Wealth® “Hawthorn”, to provide investment consulting and wealth management, fiduciary services, FDIC-insured banking products and services, and lending of funds through its subsidiary, PNC Bank, National Association, which is a Member FDIC. PNC does not provide services in any jurisdiction in which it is not authorized to conduct business. Hawthorn does not render legal, tax, or accounting advice.

Investments: Not FDIC Insured. No Bank Guarantee. May Lose Value.