How To Get The Attention Of Wealthy Prospects

December 1, 2015

by Dan Richards

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Given today’s competing demands for attention, it’s never been harder to get in front of affluent prospects. But here’s is one statistic that will get you in front of wealthy investors: Research shows that for affluent families, 70% of wealth is lost by the end of the second generation, and 90% is gone by the end of the third.

Focusing on hot buttons

To engage with prospects, you have to focus on their hot buttons. While leaving a legacy for their heirs is not typically a priority for investors with $1 million or $2 million, the higher up the wealth curve you go, the more likely that the well-being of kids and grandkids is a priority. That’s why, when talking with a wealthy prospect, it is worth saying something like, “For my clients with substantial assets, quite often leaving a legacy for children and grandchildren is an important consideration. Tell me, where does this rank among your priorities?”

If this is a high priority for them, you could add: “A recent article pointed to research showing that for wealthy families, 70% of assets are gone by the end of the second generation, and 90% are lost by the end of the third generation. I’d be happy to send you that article, but the good news is that there are some things you can do to reduce the chances of that happening.” You can link to that article from Money Magazine: Why Rich Families Lose Wealth by the Second Generation.)

The causes of wealth loss

The Money Magazine article was based on a report by U.S. Trust, Insights on Wealth and Worth. This report was based on over 600 investors with investable assets over $3 million. A third of the investors had assets of $3 to $ 5 million, a third had assets between $5 million and $10 million and the final third had assets of over $10 million.

Here are some of the findings with regard to leaving a legacy:

  • 63% said it was important to leave an inheritance;
  • But just 36% had fully disclosed their wealth to their children; and
  • Only 27% had told children how much they were likely to inherit.

The statistics on loss of wealth across generations comes from The Williams Group, founded by former San Francisco Giants tackle Roy Williams. In conjunction with an academic at the Miami of Ohio School of Business, they studied over 3,000 families to understand why only one third had lost their wealth and family harmony into the next generation. Their key finding: The primary reason for this loss was not due to poor investment performance, taxes or dilution of wealth across numerous heirs; it was the failure to preserve assets across generations due to heirs’ lack of preparation and a breakdown of trust and communication.

More about this research can be found in the 2013 Wall Street Journal article Lost Inheritance. (If you are not a Wall Street Journal subscriber, search for “Wall Street Journal Lost Inheritance” to read the article.)

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How To Get The Attention Of Wealthy Prospects