The Chinese New Year begins January 31 (Year of the Horse) and for those who'd like to celebrate with a fortune cookie consider this fun fact - fortune cookies are not a Chinese invention. In fact, many people around the world probably consider it strange to eat food with a little slip of paper inside. That said; the opportunity to receive good tidings about your future usually trumps the somewhat bland taste of this dessert staple - so enjoy.
Opportunity can be a very powerful thing, which is why it's so important for banks not to miss out on it. One area where we see potential is in building wealth management relationships with the adult children of current customers.
Many bankers are already in this game, but there is always room to improve in order to better cultivate these types of relationships with future generations. A recent survey by Wealthmanagement.com in fact, found that 50% of financial advisors polled don't have a specific strategy in place to obtain the business of the children of current clients. Another 20% only target children of certain clients. The study didn't specifically focus on banks, but we're willing to bet that the findings would ring true for the banking industry too.
There are many reasons why banks should be trying to provide wealth management services to their clients' adult children. For starters, it's a built-in referral base and we all know warm leads are a more powerful business-building tool than seminars, cold calling, or advertising.
What's more, in many cases, these adult children will be inheriting significant wealth from their parents. Cementing relationships now can lead to significant fee income down the road, which is a boon for banks trying to mitigate interest rate risk. Forming relationships with the kids of your customers can also lead to stronger advisory bonds with the parents.
If you're already providing wealth management services to customers, it's really a no-brainer to focus on their children as well. Start by talking to your existing clients about their children and how you may be able to help them from a banking and investment management perspective. You may, of course, want to be somewhat discerning about the relationships you pursue. Focus on those that have the most potential to be profitable, even if you won't realize the benefits right away.
While it may be a concern in some cases, geography also shouldn't stand in your way for the most part. With the amazing technology that's available today, location is less of an excuse than it used to be. Skype, Google Talk, and Face Time are just a few ways people today are able to connect all over the world simply and cost-effectively.
Ultimately, you may have to change some pricing structures or adjust asset minimums to work with the children of your customers, but remember the end goal is to build strong familial relationships that grow over time. Consider it in an investment in and for the future.
It's hard to predict precisely where these efforts will ultimately lead you we know, but the opportunity to build a bigger and more robust wealth management business is worth pursuing nonetheless. If you need more motivation than that, perhaps it's time to partake in a fortune cookie to see what the future holds.