Inheriting Heirs: How to Hold on to a Client’s Family or Survivors
CPAs often discuss their firm’s succession plans, but what about the smooth succession of your long-time client’s business to their heirs, business partners, and other beneficiaries?
By JEFF STIMPSON | Summer 2019
Imagine you’re a tax or financial advisor whose long-time client just
died. You’ve never worked closely with the widow or widower —
and probably at least one of the surviving children doesn’t know you
at all. How do you have — or even start — hard conversations about
aging, death, and what to do next, whether that be with a business
or an estate? And, maybe more importantly to you, how do you
become or remain a trusted and valued advisor to this family?
From a business development perspective, attracting heirs as
clients seems important, but it’s also important to have the soft skills
to empathize with a family member in that position — especially if
your goal is to build a relationship that lasts another lifetime.
“Too often CPAs aren’t proactively bringing this topic up to their
clients” amid the chaos of compliance work, says Jason Vanden
Bosch, CPA, senior managing director in the Chicago office of CBIZ
MHM. “Consider if the CPA’s entire relationship with a client consists
of the client showing up once a year to have a tax return prepared,
the client may trust the CPA to do a good job filling out tax forms
but will generally not trust the CPA with key business or personal
decisions or other matters.”
“Most people are concerned with transitioning control of their
business over to the next generation or the next group of
ownership,” Bosch says. “Our clients have spent years building up
their businesses and they won’t easily turn the keys over to
someone else, especially when it has financial implications for their
future. So, a key factor is figuring out how to have an orderly
transition in both control and financial ownership. Topics like this,
and the hard discussions that come with them, truly separate value-added
CPAs from compliance-oriented CPAs. The CPA needs to
show they’re a part of the client’s advisory team and involved in the
client’s business and life beyond compliance work.”
SCARY STATS
Figures vary, but some $30 trillion in wealth is expected to
change hands from aging baby boomers to their children or
other beneficiaries over the next few decades. That’s a potentially
rich prize for CPAs and advisors who are prepared. Consider
the following:
• Some two-thirds (and some estimates point to more than 95
percent) of younger investors leave their parents’ financial
planners when they inherit wealth.
• Many long-time clients’ children feel that their parents’ advisors
haven’t established a relationship with them.
• Three-quarters of investors say their children have never met
their financial advisors.
• Nearly half of benefactors avoid discussing inheritance plans with
their children, many because they don’t want their children to
feel entitled to wealth.
Yet, personal succession planning and the related estate and tax
planning are big issues for many clients, according to Cory Gallivan,
CPA, a principal of Scheffel Boyle in Alton, Ill. Retiring based on the
value of assets, tax cost of liquidation of those assets, timing to
claim Social Security benefits, and how to pay for health insurance,
among other issues, are all things aging clients and their heirs must
know how to navigate, Gallivan stresses.
“Health concerns can certainly ignite conversations with heirs on
a myriad of topics, including medical directives, power of
attorney, burial planning, and legacy planning,” says Dean Mioli,
Oaks, Pa.-based director of investment planning for Independent
Advisor Solutions by SEI, which has an office in Chicago. “Any
communication is far better than no communication, and it can
come in various forms — not necessarily face-to-face. The one thing
parents don’t want their children to say is that they haven’t been
told about their parents’ wishes.”
One initial challenge for CPAs and other advisors is often the lack
of communication within a family. “Family members who aren’t
involved with the client’s business or financial affairs are probably
not taking part in the current crucial decisions and conversations
we’re having with our client, so they don’t know the value we are
bringing,” Bosch says. “They may know our name in conversation,
but they have no experience with us.”
Gallivan points out another challenge: “Family members may have
different plans or expectations with the business or assets than
their parents did.”
And, of course, there’s the common issue of “quarrelling siblings,”
warns Meg Al-Qassas, CPA, a senior manager in the Skokie, Ill.
office of MichaelSilver and chair of the Illinois CPA Society’s
Taxation Estate, Gift & Trust Committee. In these situations Al-
Qassas admits that “we sometimes lose one,” referring to a client’s
heir. But, if there’s a conflict of interest in one of these situations, “It
may be just as well,” she says.
REACHING OUT, HOLDING ON
While CPAs and advisors should note that reaching out to a family
member needs prior client approval due to confidentiality, Gallivan
says, that a client’s family is often the first to reach out if they see a
sign of the client needing help in the future. “The family members
would usually call or attend meetings with a parent in those
situations. With business clients, it’s common that meetings are held
with both generations present.” This is a good opportunity to form
relationships with your client’s family or business partners.
“If mom or dad trusts the CPA, it is likely that the children or other family
members will put a lot of faith in them as well,” Gallivan suggests.
“In general, if the client is happy with us, this translates to the child
and, as they become adults, we try to provide them the level of
service that retained their parents,” Al-Qassas says, noting that her
firm tries to pair “the kids with staff who are closer to the same point
in life to foster a relationship at the generational level.”
Adopting modern tools and tactics also can help advisors
accelerate the transition to working with clients’ heirs. Advisory
firms often offer financial literacy courses or guidance on investing
and taxes for young adults. And as more firms roll out new
automation software and cloud-based solutions that free up
advisors’ time, more of their focus can go toward bringing value-added
services to the complex needs of older clients. Further,
adopting virtual practices, like utilizing Skype or other virtual meeting
technologies, can help make connecting with clients’
tech-savvy children easier and get them to put a face with an
advisors’ name and voice much sooner.
Whichever way you decide to approach the client succession topic,
there is one constant tip: Don’t wait.
“Start early and have discussions with your client regarding
transition of their business and/or personal financial matters to the
next generation. These aren’t decisions that can be made in six
months or even a year,” Bosch says. “This will generally involve the
older generation slowly giving up control and decision-making
authority to the younger. The same is true with personal financial
matters — estate planning, trusts, and so on sometimes take a very
long time.”
The decision to begin these discussions shouldn’t rest solely with
one advisor, either, Mioli suggests. “It may or may not be the CPA’s
role to take point on succession planning,” Mioli says. “The financial
quarterback should coordinate with the client’s other professionals,
such as the CPA and estate planning attorney.”
FINDING THE RIGHT WORDS
If you struggle with what to say following the passing of a
client or when your client experiences a loss of their
own, Conversational.com’s “How to Write a Meaningful
Condolence Letter to Your Client” offers this advice to help
you reach out during this difficult time:
Acknowledge the loss. “Your condolence letter should open
with you acknowledging the loss as you understand it.
Depending on the relationship with the client, you could write
the letter from a personal point of view as the business
owner (using ‘I’ statements) or from your business’
perspective (using ‘we’ statements).”
Express your condolences. “Once you’ve acknowledged
the loss your client is experiencing, you should express your
condolences. It doesn’t have to be a lengthy or emotional
expression — simply iterating your sympathy for your client
during this time will be appreciated.”
Discuss the relationship. “Next, it’s appropriate to discuss
the relationship you have to the deceased, even if it’s only
through your client. You don’t have to have a personal
relationship with the deceased to be able to comment on the
effects they’ve had in your clients’ or your life.”
Offer assistance. “You may choose to close your condolence
letter to your client with an offer to lend assistance,
depending on the length and depth of the relationship you’ve
built with the client. Including a statement about your
willingness to help or provide additional assistance will be
appreciated by your client. Chances are, they’ll never call
on you for help, but letting them know you’ll be there if they
need you is an exercise in building trust and offering
meaningful condolences.”