It’s How Dad Did It… Right?

By STEVE WHITTINGTON, CFA

In our country right now, a unique dynamic is occurring: there is a wealth transition from one generation (the baby boomers) to another (their children) that has never been seen before, both in size and scope.  The older generation has been a steward of their wealth for decades, both preserving and growing it until they can pass it on to their children and grandchildren.  As such, this younger generation that comes in to wealth may also “inherit” a relationship with their parent’s investment adviser.

Implicitly, this adviser has been both effective, trustworthy and helpful to your parents given that your parents have given their wealth to this person and kept it with them. So they’ve done a good job for your parents…but what about for you?  In this day and age, there are countless options for wealth management, and perhaps you are tempted to explore another vehicle for your inherited wealth.  And as it is with most things, what you choose will probably come down to what you value. Just because “it’s how dad did it” might not be a good enough answer for you.  Therefore, this list of questions might be helpful for you to consider.

  • Did you talk with your parents about their wealth? Communication, and therefore education, from one generation to the next about wealth is the number one most important factor in the preservation of capital. Your parents have carefully built their wealth over time; hopefully they have had a dialogue with you about how to be a responsible steward of that wealth for YOUR children as well. And somewhere in there when discussing stewardship, your parents will probably mention the role of their investment adviser and the level of comfort your parents have had with them.
  • How long was the relationship between your parents and their investment adviser? The answer to this question goes a long way into gleaning how trusted your parents’ adviser was for them, because if they were unhappy with the service they were receiving, they could (usually) go elsewhere, right?
  • Was the investment adviser more than an adviser? The term financial services, in particular “services”, means different things to different people. Often, the advisers who truly service their clients know more about them than just the dollars that are managed.
  • Did the investment adviser get to know YOU at all, previously? There are a lot of family dynamics at play with a question like this, but in our experience at MONTAG, establishing a relationship with multiple generations like you and your parents is preferred if possible.
  • Was the investment adviser informative for and transparent with your parents? Take a look at prior communications between their adviser and your parents. Were answers easy to find, and understand? Was the tone of emails between your parents and their adviser comfortable and relaxed?

 

By now, you can see where I’m going with this. The answers to these questions hopefully canvas the importance, and trust, of the investment adviser to your parents.  And, you may have already known about them and had a conversation with them as well.  But, are they right for you?

The answer to that question, as I mentioned above, is that it comes down to what you value. If your value system is similar to your parents, for example, then the adviser that they have (or had) currently will be, at the very least, a good starting point for you, if not a good fit for you.

In today’s age of the internet, there are other automated solutions for wealth management that may sound more appealing for the do-it-yourselfer (see my blog on roboadvisers here), and you may be one of those folks.  At MONTAG, what we’ve learned is what resonates the most with clients who gravitate to us is inherent in the answers to the questions above.  That is, can you pick up a phone on the worst day of the year and call someone that you know, and trust?  There is something to service beyond technological ease for some people, and it’s something that your parents valued in their long-term relationship with their adviser.

So maybe how dad did it is right for you, too.