More than ever, institutions and advisors need to establish an intergenerational continuity plan to retain assets and family relationships.

In today’s rapidly changing economic and demographic landscape, it is essential for advisors to develop an intergenerational continuity plan that not only helps to retain assets, but also facilitates the transfer of knowledge, expertise, and critical information to family members.

What is an intergenerational continuity plan?

An intergenerational continuity plan is a comprehensive family-focused financial plan that essentially outlines how a family’s wealth will be managed and importantly, transferred to future generations. The plan is designed to ensure that the family’s values and legacy are preserved and passed down through generations.

The primary purpose of an intergenerational continuity plan is to provide a roadmap for managing and transferring wealth in a way that aligns with the family’s goals and objectives; much like a financial plan is to align individual (or household) financial goals and objectives.

An intergenerational continuity plan typically includes strategies for managing and protecting assets, minimizing taxes, and ensuring that the wealth is distributed in a fair and equitable manner. This plan may also include provisions for charitable giving, education funding, and other philanthropic activities. It may involve the use of trusts, family partnerships, and other legal structures to facilitate the transfer of assets from one generation to the next.

Overall, an intergenerational continuity plan is a proactive approach to managing and preserving family wealth over the long term. It helps to ensure that the family’s legacy is passed down through the generations and that future generations (and heirs to the wealth) are able to build on the successes of their predecessors.

Keys to success when creating an intergenerational continuity plan.

Financial advisors looking to establish and maintain an intergenerational continuity plan for the families they work with can take action by considering the below “steps” or rather critical components to get started.

(1) Understand the clients’ goals and objectives

Financial advisors need to have a clear understanding of their clients’ goals and objectives for their wealth. They should understand the clients’ values and beliefs regarding wealth, and how they want to pass on their wealth to future generations.

(2) Involve the family

It’s important, and in fact necessary, for advisors to involve the family in the planning process. They should encourage open communication and involve all family members in the decision-making process. This helps to ensure that everyone is on the same page and understands the plan.

Hosting semi-annual or annual family meetings and playing the role of ‘facilitator’ is a tried and true way to encourage deeper and more meaningful conversations across the household to better align goals for the future.

(3) Develop a plan

Once enough information regarding goals, objectives, nuances with family details and structure, etc., along with a better understanding of family dynamics have been discussed and identified, advisors should have enough information to begin developing a comprehensive plan that includes strategies for transferring wealth to future generations. The plan should be flexible and adaptable to changing circumstances.

(4) Educate the next generation

Importantly, advisors should always be looking for ways to help educate the next generation about financial management, wealth transfer, and family values, especially when it involves a large amount of wealth being passed down through generations.

This includes teaching the basics about budgeting, saving, investing, tax strategies, and charitable giving. The more your firm and advisors educate and inform, the more trust you will establish with the next generation.

(5) Monitor and adjust the plan

After developing the initial plan, and just like any type of financial plan for clients, your work is never done. Maintaining the family’s intergenerational continuity plan requires ongoing maintenance, regular meetings, and an ongoing understanding of changing family dynamics.

All of this will ensure that the plan remains relevant and effective in achieving your clients’ goals and objectives.

Overall, creating an intergenerational continuity plan requires a collaborative effort between advisors, clients, and family members, including the next generation. By following these steps, financial advisors can help their clients ensure that their wealth is preserved and passed on to future generations in accordance with their wishes.

Information (and having access to it) is fundamental to every intergenerational continuity plan

Having a structured information management plan in place and providing family members with access to this information is one of the biggest components of any continuity and succession plan. A well-structured way to manage critical information and documents will help to ensure a smooth transition of assets and provide peace of mind for clients and their families.

One of the most effective (and efficient) ways firms and advisors can execute (and maintain) an intergenerational continuity plan is by implementing a secure digital vault for family legacy information and documents.

A well-structured digital vault can serve as a central repository for all of the important documents and information that clients and their families need to access in the event of a change in circumstances, such as the passing of a family member or the retirement of an advisor.

To create a successful continuity plan using this approach, institutions and advisors should ensure that the data and document vault being used is accessible to all relevant parties, including family members, attorneys, accountants, wealth advisors, and other trusted advisors, and that the documents are organized in a clear and easy-to-navigate manner. Importantly, it’s critical to ensure that all relevant parties have access to the appropriate areas, folders, and documentation they need to have access to.

It should go without saying that security and data privacy is table stakes. Look for a digital vault solution (FutureVault) that comes equipped with advanced encryption in-transit and at-rest, multi-factor authentication, secure access permissioning, encrypted file-sharing capabilities, regular backups, along with meeting your data residency and document retention requirements, and so forth.

And importantly, being able to access, share, and deliver critical information anytime, anywhere is critical in today’s fast-paced, digital, and remote-enabled world. Your clients (and their family members) will benefit tremendously by being able to access critical information and documents on their desktop, tablet, or mobile devices, 24/7, wherever they are in the world.

Preparing for the next generation of clients

The fact of the matter is that most financial advisors are not nearly as prepared as they need to be and that the majority of heirs to the wealth will be looking to make moves, on their own terms.

With more than 70% of heirs are likely to fire or change financial advisors after inheriting their parents’ wealth (according to Cerulli Associates), this transfer of wealth has massive implications on how firms and wealth advisors need to be operating their businesses and servicing households to better secure any chance they might have of participating in wealth transfer conversations with families, and of course, in retaining assets and relationships.

An intergenerational continuity plan is absolutely critical for firms and advisors looking to build trust and confidence with the next generation, and leveraging a best-of-breed digital document vault can ensure your firm and your advisors and putting your best foot forward to engage with current and future generations.