A multigenerational model links parents, children and even grandchildren with tiered fees.Екатерина Скворцова/iStockPhoto / Getty Images
With billions of dollars expected to pass between generations in the coming decade, Canadian wealth management firms are rethinking how to serve their clients’ families and retain assets.
One solution is family-tree pricing, a strategy designed to retain entire households across generations, even when the youngest members are still early in the stages of building their wealth.
“At its core, family-tree pricing means we don’t just serve a portfolio – we serve a family legacy,” says Amy Dietz-Graham, senior wealth advisor and portfolio manager at National Bank Financial Wealth Management in Toronto. “It’s like giving every branch of the tree, not just the trunk, a bit of sunlight.”
A multigenerational model links parents, children and even grandchildren under one umbrella, with tiered fees that adjust as family members’ financial needs evolve.
“We match our advice and services to their stage in life – from ‘How do I pay off my student loans?’ to ‘How do I fund a family foundation?’” she explains.
Establishing connections with younger family members is becoming more urgent, says Kendra Thompson, financial services consultant and founder of Epok Advice in Toronto.
“Between 70 and 83 per cent of assets leave the firm within three years of the death of the primary account holder,” she says.
“Advisors are realizing their priority needs to be the surviving spouse as well as the child most likely to influence decisions around estate and family. Family-tree pricing is a way of staying relevant to everyone connected to that wealth.”
To prevent attrition, Ms. Thompson encourages advisors to start conversations long before wealth transfers occur.
“You can’t build intimacy with someone you don’t know or don’t even know exists,” she says. “Advisors who hold family meetings, offer lighter-touch financial education, or provide guidance through major life events, such as a first job or home purchase, are the ones who stay relevant.”
Martin Weiler, founder and chief executive officer of First Capital Financial Corp. in Dundas, Ont., says his firm approaches successive generations “holistically rather than separately.”
“If we have parents with seven-figure portfolios and kids in their 20s with small accounts, we don’t charge the kids more or give them less service,” he says. “They benefit from the family’s collective wealth – that’s part of the democracy of our model.”
Mr. Weiler recalls a recent case in which a longtime client inherited a seven-figure sum and chose to gift much of it to his children, who were in their teens and 20s.
“We’d already been working with those kids for years, setting up small [tax-free savings accounts] with $50 or $100 monthly contributions,” he says.
“We were already spending more time with them than those dollars could justify, so when the inheritance came, they didn’t see us as suddenly interested just because they had money – we’d already earned their confidence and loyalty.”
To serve each generation effectively, Mr. Weiler has built what he calls a multifaceted, multigenerational firm with advisors spanning between their 20s and 60s.
“Behind them all is a bench of senior advisors providing that gravitas and oversight. It’s how we ensure every generation feels represented,” he says.
At Raymond James Ltd., flexibility is also key to bridging generations.
“Because our advisors operate independently, they can tailor services and pricing structures for their clients and households,” says Samantha Ouimet, senior vice-president of corporate communications and marketing.
The company’s “household pricing” model aligns services with each generation’s stage of wealth development, from discounted fees for younger investors to advanced estate planning for aging clients, she says.
Firms also have to be prepared to serve the next generation on their own terms, Ms. Thompson says.
As digital-first millennials and Gen Z investors accumulate wealth, their expectations for a hybrid experience that’s values-driven, tech-enabled and deeply personal are reshaping the industry, she says.
“Digital is beyond table stakes now,” she says. “It’s how firms build scalability and maintain engagement. The mistake is assuming younger clients will automatically see the value of a dedicated advisor.”