How Advisors Cope When Clients’ Heirs Head for the Exit

Kids these days, right?

Between recession fears, a mass retirement of older planners and the looming presence of AI, advisors have plenty on their plates. And that’s without counting one of the industry’s biggest challenges: Watching assets walk out the door when clients’ children inherit their parents’ wealth, then take their business elsewhere.

This isn’t a distant threat of the Great Wealth Transfer, either. It’s happening now. Many advisors have already lost business with a client’s heirs, and while some treat it as a wakeup call, others simply don’t sweat it. “My initial reaction used to be disappointment, but I’ve come to realize it’s not personal,” said Dean Tsantes, CFP with VLP Financial Advisors.

It’s Not You, It’s Me

Only about a fourth of those who expect to receive an inheritance said they would maintain an existing relationship with the managing advisor, according to a recent Cerulli report. That number drops to just 20% among those who already have received an inheritance. So don’t blame yourself if and when they leave.

However, when client’s children have gone elsewhere, Tsantes viewed it as a reminder to connect with them earlier. “Advisors can’t wait until an estate transfers to start building relationships with the next generation,” he told Advisor Upside. “If you’re not proactive, the likelihood of retention is slim.”

Still, engagement only goes so far. Success depends more on family dynamics than advisor outreach, according to Ralph Bender, founder of Enduring Wealth Advisors. “Open, trusting families with parents actively involved in the children’s financial education yield more G2 clients than more financially dysfunctional families,” he told Advisor Upside.

Stay Focused. Losing next-gen clients may sting, but it’s not always a crushing blow. Advisors focused on a specific niche may not align with younger clients’ needs or attitudes, and attempting to hold on to them might not be worth the effort, according to Landon Tan, founder of Query Capital. “This work is really personal, and it doesn’t feel realistic for most advisors to deeply resonate with their clients’ children,” Tan told Advisor Upside. “It seems more practical for advisors to focus on replacing lost revenue from clients passing away with other new clients who are more similar.”