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Reaching out to family members of clients is a service, but firms that provide them also benefit. ‘Industry research has shown that women and millennials are the two biggest opportunities in terms of potential for the financial-services sector,’ Barbara Stewart of Cumberland Private Wealth says. (Fernando Morales/The Globe and Mail)
Reaching out to family members of clients is a service, but firms that provide them also benefit. ‘Industry research has shown that women and millennials are the two biggest opportunities in terms of potential for the financial-services sector,’ Barbara Stewart of Cumberland Private Wealth says. (Fernando Morales/The Globe and Mail)

EDUCATION

Financial fluency: bringing up the next generation Add to ...

Talks on wine, travel and how to invest in art. Full-day seminars on financial fluency. Classroom programs to teach kids as young as 12 about capital gains and dividends.

For high-net-worth individuals, speaking just to a financial adviser isn’t enough any more. Banks and wealth-management firms are offering a slew of seminars and conferences for wealthy clients – and their children, the next generation of wealth holders – to educate them about everything from maintaining core assets to legal issues to philanthropy.

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Educational programs, the firms say, are a direct response to clients seeking more information.

“Wealth isn’t just about dollars and cents. It’s not about how much money you’re worth,” says Tony Maiorino, vice-president and head of wealth management services at RBC Wealth Management. “It’s about things like, ‘How is my estate going to transition to my children?’ … And there definitely is demand from our clients to be educated on these issues.”

Barbara Stewart, a partner at Cumberland Private Wealth Management in Toronto, says, clients “expect us to be doing all these things.”

For most wealth-management firms, that means offering programs at least once a year. RBC Wealth Management, for example, offers sessions across the country on tax and estate planning, as well as seminars aimed at business owners. Richardson GMP Ltd. holds a luncheon series twice a year on issues such as estate planning for executors, understanding U.S. income and estate taxes and planning the transfer of wealth. Cumberland offers “cocktail-party-like” events that are aimed at both educating and encouraging networking, and cover topics such as philanthropy.

But firms go far beyond those general courses, particularly with educating the children of clients, in so-called NextGen programs.

WaterStreet Family Offices, a Toronto wealth advisory firm that focuses on ultrahigh-net-worth families, has developed a curriculum for offspring, divided into three age groups – 12 to 16, 16 to 24, and 24 or older. Students spend about seven to 10 hours annually on the classroom program, in sessions three or four times a year.

“We tailor the discussions to what they need to hear about,” says Tim Cestnick, WaterStreet’s president, who is also an author and columnist for The Globe and Mail. “So when kids are approaching their early 20s, we’ll talk about prenuptial agreements; you don’t need to talk about that when you’re 12.”

At 12, the topics include: What is a cheque? What is interest? What are capital gains? Dividends?

That curriculum is meant to supplement what Mr. Cestnick calls “on-the-job training” – making children trustees or putting them on the board of a family foundation, for instance.

BMO Harris Private Banking provides a program for the adult children of clients called Financial Fluency, a day-long workshop held across the country that teaches the basics of investing – banking, asset classes, risk, portfolio management and the psychology of investing. After the first year of Financial Fluency in 2008, the bank began a similar program for what it calls the “non-financial spouse” – the person in a household who is less likely to make financial decisions. It also holds sessions for other advisers to their clients – lawyers and accountants, for example.

BMO Harris brings in experts to speak on “the mystery of non-financial aspects of wealth,” says Yannick Archambault, vice-president and chief operating officer. Those talks – on topics such as intergenerational wealth transfer and philanthropy – are in turn posted on websites.

Reaching out to family members of clients, particularly children, is considered a service, but companies that provide them also benefit.

As Ms. Stewart points out, “Industry research has shown that women and millennials are the two biggest opportunities in terms of potential for the financial-services sector.”

A U.S. report by Aite Group, released last July, puts it more bluntly: Younger generations, through inheritances and on their own, will be a huge target for wealth-management firms, and many of these potential clients are less loyal than their parents are to a particular company or adviser.

Still, one-on-one relationships count the most. “What we’re trying to do here is offer our services in the form of mentoring,” says Betty Tomsett, director of wealth management and investment adviser at Richardson GMP. “And that’s a day-to-day practice.”

Richardson GMP, like many larger firms, has accountants, lawyers and financial planners on staff to help their wealthy clients with issues beyond just what to put in their portfolios. That kind of access, Ms. Tomsett says, brings education down to “the grassroots level” – through client reviews and client discussions.

The more clients know, the better, Mr. Archambault says.

“It leads to much richer discussions.”

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