$150K AUM Boost: Next-Gen Engagement Program for Heirs

$150K AUM Boost: Next-Gen Engagement Program for Heirs

Executive Summary

Whitfield Tax faced a significant challenge: retaining inherited assets when original clients passed away. Without proactive engagement, beneficiaries often transferred assets to other firms, eroding the company's AUM. Whitfield Tax implemented a comprehensive next-gen engagement program tailored to the unique needs and financial literacy levels of heirs. This initiative resulted in an 80% retention rate of inherited assets and a $150,000 increase in AUM within the first year.

The Challenge

Whitfield Tax, a respected wealth management firm with $50 million in AUM, recognized a growing threat to its long-term stability: the lack of engagement with the next generation of their clients' families. While they excelled at serving their primary client base – individuals typically aged 60 and above – they were failing to connect with their beneficiaries, often the children or grandchildren of their clients, who were likely to inherit significant assets.

The problem manifested in several ways. Firstly, these heirs often lacked a strong understanding of financial planning and investment management. Many were intimidated by the complexities of the market and hesitant to engage with a financial advisor, particularly one they hadn't personally cultivated a relationship with. For instance, a recent internal audit revealed that when a client with $500,000 in managed assets passed away, their children, despite being informed of Whitfield Tax's services, transferred $400,000 to a competitor firm within six months, citing "better online tools" and "more millennial-friendly communication." This represented an 80% asset loss from that one client alone.

Secondly, Whitfield Tax’s communication strategy wasn't resonating with the younger demographic. Their traditional approach, focused on quarterly reports and annual in-person meetings, felt outdated and irrelevant to heirs accustomed to digital communication and on-demand information. A survey of beneficiaries showed that 70% preferred receiving financial information through online channels like email, webinars, and personalized portals.

Finally, the lack of a proactive strategy meant that Whitfield Tax was often reactive, only engaging with heirs after the death of the original client. This late-stage engagement put them at a disadvantage, as heirs were already grieving and often overwhelmed with estate planning responsibilities. This created an opportunity for competing firms to swoop in and offer "simplifying" solutions, often resulting in the transfer of assets. Whitfield Tax estimated that, without intervention, they stood to lose an average of 25% of their AUM over the next five years due to this lack of next-gen engagement.

The Approach

Whitfield Tax recognized the need for a proactive and tailored approach to engaging the next generation. Their strategy was built upon three core pillars: education, personalization, and proactive communication.

1. Education: The firm understood that many heirs lacked a solid foundation in financial literacy. To address this, they developed a comprehensive educational program consisting of:

• Webinar Series: A series of monthly webinars covering topics relevant to younger investors, such as budgeting, debt management, investing basics, and retirement planning. These webinars were designed to be interactive and engaging, featuring Q&A sessions with experienced financial advisors. Topics included "Understanding Compound Interest," "Investing in the Stock Market: A Beginner's Guide," and "Saving for Retirement: A Roadmap for Millennials."
• Financial Planning Workshops: In-person workshops offered quarterly, providing a more hands-on learning experience. These workshops focused on developing personalized financial plans, setting financial goals, and understanding investment strategies. Each workshop had a limited capacity to ensure individualized attention.
• Heir-Specific Content: Creation of dedicated resources on Whitfield Tax's website, including articles, videos, and calculators tailored to the needs and interests of heirs. This content covered topics such as understanding estate taxes, navigating inheritances, and investing for the long term.

2. Personalization: Recognizing that each heir had unique financial circumstances and goals, Whitfield Tax adopted a personalized approach to engagement.

• Individual Financial Planning Sessions: Offering complimentary one-on-one financial planning sessions with experienced advisors. These sessions were designed to understand the heir's specific needs, goals, and risk tolerance, and to develop a customized financial plan.
• Tailored Communication: Segmenting heirs based on age, income, and investment experience, and delivering targeted communication tailored to their individual needs. This included personalized emails, newsletters, and investment recommendations.
• Preferred Communication Channels: Allowing heirs to choose their preferred method of communication, whether it was email, text message, phone call, or video conference.

3. Proactive Communication: Shifting from a reactive to a proactive communication strategy.

• Early Introduction: Introducing heirs to Whitfield Tax and its services before the death of the original client. This involved inviting heirs to attend webinars, workshops, and client events, and sending them personalized introductory materials.
• Regular Check-ins: Establishing a system for regular check-ins with heirs, even if they weren't actively managing their assets with Whitfield Tax. This involved sending them birthday cards, holiday greetings, and invitations to financial education events.
• Estate Planning Support: Providing support and guidance to heirs during the estate planning process, helping them navigate the complexities of inheritance and taxes.

The firm’s decision framework was based on the premise that building trust and providing value to heirs before they inherited assets would significantly increase the likelihood of retaining those assets after the original client's passing. They projected that a 50% retention rate would be considered a success, aiming to exceed that number.

Technical Implementation

The implementation of Whitfield Tax's next-gen engagement program involved several key technical components:

• GoToWebinar: Utilized GoToWebinar for hosting online webinars and workshops. This platform allowed for interactive presentations, Q&A sessions, and attendee tracking. The firm purchased a GoToWebinar license that accommodated up to 500 attendees per session. Webinar recordings were automatically saved and uploaded to the firm’s website for on-demand viewing.
• Website Integration: Created a dedicated section on Whitfield Tax's website specifically for heirs. This section included educational resources, webinar recordings, advisor biographies, and contact information. The site was optimized for mobile viewing and search engine optimization (SEO) using keywords relevant to estate planning, inheritance, and next-generation wealth management.
• Wealthbox CRM: Employed Wealthbox CRM to track heir interactions and manage communication. Each heir was assigned a profile in Wealthbox, which included their contact information, communication preferences, financial goals, and interactions with Whitfield Tax. The CRM was integrated with GoToWebinar to automatically track webinar attendance.
• Email Marketing Platform: Utilized Mailchimp for email marketing campaigns. Mailchimp was integrated with Wealthbox to segment heirs based on their demographics, interests, and engagement level. This allowed Whitfield Tax to send targeted emails promoting relevant webinars, workshops, and financial planning services.
• Personalized Financial Planning Software: Utilized eMoney Advisor to create personalized financial plans for heirs during their one-on-one planning sessions. This software allowed advisors to model different scenarios, project future wealth, and recommend investment strategies tailored to the heir's individual needs and goals.
• Performance Tracking: Implemented a system for tracking key performance indicators (KPIs), such as webinar attendance rates, website traffic to the heir-specific section, and the number of financial planning sessions scheduled. These KPIs were monitored on a monthly basis to assess the effectiveness of the program and identify areas for improvement. ROI was specifically calculated using the following formula: ((Retained AUM * Average Advisory Fee) - Program Costs) / Program Costs. The firm’s average advisory fee was 1% of AUM. Program costs included GoToWebinar licensing, marketing materials, and advisor time dedicated to the program.

Results & ROI

The next-gen engagement program yielded significant positive results for Whitfield Tax within the first year:

• AUM Retention: Retained 80% of inherited assets from clients who passed away during the year. This represented a significant improvement compared to the previous year, when the retention rate was only 55%. Specifically, of the $750,000 in assets that came under review due to client deaths, $600,000 was retained.
• AUM Increase: Increased AUM by $150,000 solely due to the retention of inherited assets. This increase was calculated as follows: $600,000 (retained AUM) - $450,000 (expected AUM based on the previous year's 55% retention rate) = $150,000.
• Webinar Attendance: Average webinar attendance rate of 65%, indicating strong engagement with the educational content. On average, 325 heirs attended each webinar.
• Website Traffic: Increased traffic to the heir-specific section of the website by 150%, demonstrating growing awareness and interest in Whitfield Tax's services.
• Client Satisfaction: Improved client satisfaction scores among heirs, with 90% reporting a positive experience with Whitfield Tax's services. This was measured through post-webinar surveys and follow-up phone calls.
• ROI Calculation: The program costs for the first year totaled $15,000 (including software licenses, marketing, and advisor time). The revenue generated from the retained AUM was $6,000 ($150,000 * 1% advisory fee * 40%, to account for the fact that the AUM wasn't retained for the entire year, on average). Therefore, the ROI was calculated as follows: (($6,000) - $15,000) / $15,000 = -60%.

While the ROI was negative for the first year, this was due to upfront investment costs and the fact that the retained AUM didn’t generate revenue for the entire year. Whitfield Tax projects a positive ROI in subsequent years as the retained AUM continues to generate revenue with minimal additional program costs. Based on current projections, the firm expects to realize a 200% ROI within three years.

Key Takeaways

Here are three actionable insights for other financial advisors:

1. Start Early: Don't wait until after a client's passing to engage with their heirs. Proactively introduce heirs to your firm and its services early on to build trust and relationships.
2. Personalize the Experience: Tailor your communication and financial planning services to the unique needs and goals of each heir. Avoid a one-size-fits-all approach.
3. Embrace Technology: Utilize technology to deliver engaging and accessible educational content. Consider using webinars, online portals, and mobile apps to reach younger investors.

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