Next-Gen Engagement: 25% Increased Heir Account Transfers

Next-Gen Engagement: 25% Increased Heir Account Transfers

Executive Summary

Cornerstone Wealth Advisors faced a common challenge: retaining assets when wealth transferred to the next generation. Dissatisfied with traditional approaches, Cornerstone implemented a comprehensive next-gen engagement program featuring financial literacy workshops, personalized investment advice, and digital-first communication. This proactive strategy resulted in a 25% increase in account transfers from deceased clients to their heirs, significantly bolstering long-term asset retention and future growth for the firm.

The Challenge

Cornerstone Wealth Advisors, a well-established firm managing over $500 million in assets, recognized a critical vulnerability in their long-term growth strategy: the transfer of wealth to the next generation. While they excelled at serving their existing clientele, typically high-net-worth individuals aged 55 and above, retaining those assets after the client's passing proved increasingly difficult.

The problem wasn't client dissatisfaction during their lifetime; it was the disconnect with the heirs. Cornerstone’s traditional communication style, heavily reliant on in-person meetings and paper statements, simply didn't resonate with the younger, digitally-native generation. Heirs, often inheriting significant portfolios averaging $750,000, were frequently unaware of Cornerstone's services or perceived them as outdated and irrelevant.

Before implementing a targeted program, Cornerstone estimated that approximately 40% of inheritable assets, totaling around $12 million annually, were transferred to other firms within the first year after the client's death. This outflow represented a significant revenue loss, estimated at $60,000 per year based on a conservative 0.5% average advisory fee. Furthermore, anecdotal evidence suggested that a significant portion of these assets were consolidated at larger national brokerage firms with more sophisticated technology and broader service offerings perceived to be more attuned to the needs of younger investors.

One specific case highlighted the urgency: the Smith estate, valued at $1.2 million, was inherited by two adult children, both in their early 30s. Despite repeated attempts by Cornerstone advisors to schedule meetings and explain their investment strategy, the heirs ultimately chose to move the entire portfolio to a robo-advisor, citing ease of use and lower fees. This single loss represented a potential annual revenue loss of $6,000 for Cornerstone. The firm knew that it had to adapt or risk losing a substantial portion of its assets under management to competitors. They realized that this next generation had different expectations and communication preferences that were not being met with Cornerstone's old approach.

The Approach

Michael, a senior advisor at Cornerstone, spearheaded the development of a comprehensive next-gen engagement program. The program was based on three core pillars: financial literacy, personalized advice, and digital-first communication.

Financial Literacy: Recognizing the need to educate heirs on financial planning and investment management, Cornerstone launched a series of quarterly online workshops tailored to different age groups and financial situations. These workshops covered topics such as:

• Investment Basics: Explained fundamental investment concepts, risk tolerance, and asset allocation strategies.
• Retirement Planning: Provided guidance on retirement savings, tax-advantaged accounts (401(k)s, IRAs), and estate planning considerations.
• Debt Management: Offered strategies for managing student loans, credit card debt, and other forms of debt.
• Estate Planning Basics: Introduction to wills, trusts, and the estate settlement process.

The workshops were hosted on Zoom and recorded for on-demand viewing, ensuring accessibility for all heirs regardless of their location or schedule. Post-workshop, participants received customized follow-up emails with relevant articles, calculators, and investment recommendations.

Personalized Advice: Cornerstone proactively reached out to heirs within 30 days of the client's passing, offering a complimentary financial planning consultation. This consultation focused on understanding their financial goals, risk tolerance, and time horizon. Instead of immediately pushing investment products, advisors prioritized building relationships and providing unbiased advice.

The firm also implemented a tiered service model based on the heir's asset level and complexity of their financial situation:

• Tier 1 (Assets < $250,000): Offered access to a dedicated financial planning portal with interactive tools and educational resources.
• Tier 2 (Assets $250,000 - $500,000): Included personalized financial planning sessions with a junior advisor, focused on investment recommendations and goal setting.
• Tier 3 (Assets > $500,000): Provided comprehensive financial planning services with a senior advisor, including tax planning, estate planning, and wealth management strategies.

Digital-First Communication: Cornerstone overhauled its communication strategy to prioritize digital channels. This included:

• Secure Client Portal: Developed a user-friendly online portal where heirs could access account information, track performance, view statements, and communicate with their advisor.
• Targeted Email Marketing: Created customized email campaigns based on the heir's age, financial situation, and interests. These campaigns featured relevant articles, videos, and event invitations.
• Social Media Engagement: Established a presence on LinkedIn and other social media platforms to share financial literacy content and engage with younger audiences.
• Mobile Optimization: Ensured that all websites and communication materials were optimized for mobile devices.

The strategic framework was designed to shift from a reactive to a proactive approach, creating early and ongoing engagement with the next generation to establish trust and demonstrate value. This approach was aligned with the long-term objectives of asset retention and organic growth for the firm.

Technical Implementation

The implementation of Cornerstone's next-gen engagement program involved several key technologies and processes:

• Secure Client Portal: The portal was built using a combination of React for the front-end and a Python-based API for the back-end, hosted on AWS. Security was paramount, with multi-factor authentication and encryption implemented throughout the platform. The portal integrated directly with Cornerstone's custodial platform (Schwab Advisor Services) to provide real-time account information.
• Digital Onboarding: New heirs were onboarded through a streamlined digital process that included secure document upload, electronic signature, and automated KYC (Know Your Customer) verification. This process reduced paperwork and accelerated the account opening process.
• Financial Planning Tools: The secure client portal integrated with eMoney Advisor, a leading financial planning software, allowing advisors to create comprehensive financial plans for heirs. These plans included retirement projections, investment recommendations, and estate planning scenarios. The Monte Carlo simulation capability within eMoney Advisor was critical for illustrating probability ranges related to achieving financial goals.
• Targeted Email Marketing: Cornerstone leveraged Mailchimp to create and manage targeted email campaigns. The platform allowed for segmentation based on age, asset level, interests, and engagement history. Email campaigns were personalized with dynamic content and automated triggers based on user behavior. Open rates, click-through rates, and conversion rates were closely monitored to optimize campaign performance. A/B testing was used to refine email subject lines, content, and calls to action.
• CRM Integration: Salesforce was used to manage all client interactions and track heir engagement. This integration provided advisors with a 360-degree view of each heir's relationship with Cornerstone, allowing them to personalize their communication and service.
• Compliance: All digital communication and processes were reviewed and approved by Cornerstone's compliance team to ensure adherence to SEC regulations and industry best practices.

The calculations used to measure ROI were straightforward: The total dollar amount of assets retained from heirs as a direct result of the program was tracked. These assets were then measured against assets that would have been lost had the previous rate of attrition remained constant.

Results & ROI

The results of Cornerstone's next-gen engagement program were significant:

• Increased Heir Account Transfers: Account transfers from deceased clients to their heirs increased by 25%. Before the program, approximately 60% of inheritable assets stayed with Cornerstone. After implementing the program, this number increased to 75%.
• Increased Assets Under Management (AUM): Over the past year, the program has resulted in the retention of approximately $9 million in assets that would have otherwise been lost. This increase in AUM generated an estimated $45,000 in additional annual revenue for Cornerstone based on a 0.5% average advisory fee.
• Improved Client Satisfaction: Heir satisfaction scores, measured through online surveys, increased by 15%. Heirs reported feeling more informed, engaged, and valued by Cornerstone.
• Reduced Client Attrition: Overall client attrition decreased by 5% as a result of the program. This indicates that the program is not only effective at retaining heirs but also at strengthening relationships with existing clients.
• Workshop Attendance: On average, 40% of invited heirs attended the quarterly financial literacy workshops. This high attendance rate demonstrates the value that heirs place on financial education.
• Increased Engagement: Click-through rates on email campaigns increased by 30% compared to previous marketing efforts. This indicates that the targeted messaging and digital-first approach are resonating with heirs.

Specifically, the assets from the Smith estate – which initially fled to a robo-advisor – were partly recovered: One of the two heirs decided to move half of their inheritance back to Cornerstone after attending a financial literacy workshop and having a personalized planning session.

Key Takeaways

Here are actionable insights for other advisors looking to improve their next-gen engagement:

1. Prioritize Financial Literacy: Invest in educational resources and workshops to empower heirs with the knowledge they need to make informed financial decisions.
2. Personalize Communication: Tailor your communication and service offerings to the specific needs and preferences of younger generations.
3. Embrace Digital Channels: Leverage technology to provide a seamless and convenient client experience.
4. Proactively Engage: Reach out to heirs early and often to build relationships and establish trust.
5. Track and Measure Results: Monitor key metrics to assess the effectiveness of your program and make data-driven improvements.

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