Diana Rossi Boosts AUM Retention 12% Via Next-Gen Onboarding
Executive Summary
Diana Rossi, a leading advisor at Rossi Family Office Services, faced a critical challenge: losing high-net-worth assets during generational wealth transfers. Historically, upon inheritance, younger family members often shifted assets to other firms, citing a lack of prior engagement. To combat this, Diana implemented a strategic next-gen onboarding program designed to educate and integrate heirs into the family's financial planning process, resulting in a 12% increase in AUM retention among participating families within the first year. This translates to a significant $93.6 million in retained assets.
The Challenge
Rossi Family Office Services caters to ultra-high-net-worth families, managing substantial assets across various investment vehicles. A persistent challenge, however, was the attrition of assets during generational transfers. For years, a pattern emerged: upon inheriting assets, younger beneficiaries, often unfamiliar with the firm and its services, would transfer those assets to advisors with whom they felt more connected or who better understood their specific needs and values.
This trend presented a significant threat to the firm's long-term growth and sustainability. Data analysis revealed that, on average, the firm was losing approximately 15% of AUM within 18 months of an inheritance event. Consider the case of the "Miller Family Portfolio," valued at $15 million. Upon the patriarch's passing, his two adult children, who had minimal prior interaction with Rossi Family Office Services, decided to consolidate their inherited assets with a different firm citing feeling more aligned with their offerings. The Miller Family Portfolio represented a $2.25 million loss due to this generational transfer.
These transfers weren't necessarily due to dissatisfaction with performance. Feedback consistently indicated a lack of prior engagement and understanding of the family's overall financial strategy. The younger generation often perceived Rossi Family Office Services as their parents' or grandparents' advisor, not their own. The firm needed to overcome this perception and proactively engage the next generation before inheritance became the catalyst for asset transfer. The need was to proactively address the wealth transfer challenges stemming from disengaged next-generation family members who lacked familiarity and connection with Rossi Family Office Services. This required a strategy to secure intergenerational wealth transfer.
The Approach
Diana Rossi recognized the need for a paradigm shift in how the firm interacted with its high-net-worth families. She spearheaded the development and implementation of a comprehensive next-gen onboarding program, focusing on early engagement and financial literacy.
The strategic framework for this program was built on three core principles:
- Education: Providing the next generation with the financial knowledge and skills necessary to understand and manage their wealth effectively.
- Relationship Building: Fostering meaningful relationships between younger family members and the firm's advisors.
- Personalization: Tailoring the program to meet the specific needs and interests of each individual family.
The program consisted of several key components:
- Financial Literacy Workshops: Interactive workshops covering fundamental financial concepts, investment strategies, tax planning, and estate planning. These workshops were designed to be engaging and relevant to the younger generation, using real-world examples and case studies. They featured topics such as “Understanding the Stock Market,” “Building a Diversified Portfolio,” and "Responsible Spending Habits."
- Early Involvement in Portfolio Reviews: Inviting younger family members to participate in portfolio reviews, providing them with the opportunity to ask questions, express their concerns, and learn about the firm's investment philosophy. This early exposure aimed to demystify the investment process and empower them to make informed decisions.
- Personalized Financial Planning Sessions: Offering one-on-one financial planning sessions tailored to the specific goals and circumstances of each individual. These sessions focused on helping them define their financial objectives, develop a budget, and create a plan for achieving their goals. For example, a 28-year-old beneficiary might prioritize saving for a down payment on a home, while a 35-year-old might be more focused on retirement planning.
- Mentorship Program: Pairing younger family members with experienced advisors to provide guidance and support. The mentors served as trusted advisors, helping them navigate the complexities of wealth management and develop their financial acumen.
- Digital Engagement Platform: Creating a digital platform that provides access to educational resources, portfolio information, and communication tools. This platform was designed to be user-friendly and accessible, allowing the next generation to stay informed and engaged with the firm's services.
Diana also established a clear communication protocol. All communications to the primary client were systematically mirrored to the designated next-gen contact, fostering transparency and inclusion. She stressed the importance of active listening and tailored communications that resonated with younger generations' interests, such as sustainable investing and technology integration. This helped in establishing trust and proving the value of Rossi Family Office Services beyond traditional wealth management.
Technical Implementation
The successful implementation of the next-gen onboarding program relied on a combination of technological solutions and human interaction.
The program leverages several key platforms:
- Thinkific: The financial literacy workshops were built using Thinkific, an online learning platform. This allowed for the creation of customized learning modules with interactive quizzes, videos, and downloadable resources. Modules were tailored to different age groups and financial literacy levels, ensuring that the content was relevant and engaging for each participant. Quizzes measured knowledge retention, and completion rates were tracked to gauge the program's effectiveness.
- Salesforce Marketing Cloud: Personalized communication flows were built within Salesforce Marketing Cloud. This enabled automated email campaigns to be sent to younger family members, providing them with updates on their portfolio, invitations to workshops, and relevant financial news. Segmentation was crucial, ensuring that each individual received content tailored to their specific interests and needs. For example, those interested in socially responsible investing (SRI) received targeted content on ESG (Environmental, Social, and Governance) investments.
- Client Relationship Management (CRM) System: Rossi Family Office Services' existing CRM system was used to track engagement and monitor the progress of each participant in the program. This allowed advisors to identify those who were most engaged and those who required additional support. Data from the CRM system was used to refine the program and ensure that it was meeting the needs of its participants.
- Performance Reporting System: Integration with the firm's performance reporting system allowed for tracking of AUM retention among families participating in the program. This provided a clear measure of the program's ROI. The calculation of AUM retention rate involved tracking the total AUM managed for families with next-gen participants at the beginning of the year (AUM<sub>beginning</sub>) and comparing it to the total AUM managed for the same families at the end of the year (AUM<sub>end</sub>). The difference, adjusted for net contributions (NC) made by the family during the year, provided the AUM change attributable to retention efforts:
Retention Rate = ((AUM<sub>end</sub> - AUM<sub>beginning</sub> + NC) / AUM<sub>beginning</sub>) * 100
- Integration with eMoney Advisor: The firm integrated eMoney Advisor with the onboarding program to allow next-gen clients access to their family’s financial planning and wealth management strategy.
Data security and privacy were paramount. All platforms were configured to comply with relevant regulations, such as GDPR and CCPA.
Results & ROI
The implementation of the next-gen onboarding program yielded significant positive results.
- AUM Retention: AUM retention among families participating in the program increased by 12% in the first year. This represents a substantial improvement compared to the pre-program retention rate of 85%. This translated to retaining $93.6 million that would have otherwise potentially been transferred to other firms. This AUM was calculated based on an assumed AUM managed of $780 million. ($780M * 12% = $93.6M).
- Engagement Metrics: Workshop attendance rates averaged 75%, indicating a high level of interest and engagement from the next generation. Participation in portfolio reviews also increased significantly, with younger family members actively contributing to discussions and asking insightful questions.
- Client Satisfaction: Client satisfaction scores among families participating in the program increased by 15%. Feedback consistently highlighted the value of the program in providing the next generation with the knowledge and skills necessary to manage their wealth effectively.
- New Client Acquisition: The program also contributed to new client acquisition, as several participating families referred their friends and colleagues to Rossi Family Office Services. One existing client even transferred an additional $5 million to the firm, citing the next-gen onboarding program as a key factor in their decision.
- Advisor Efficiency: While initially requiring an investment of time to develop and implement the program, the standardized process and automated communication flows ultimately improved advisor efficiency, allowing them to focus on higher-value tasks, like complex financial planning and investment management.
The financial impact of the program extended beyond AUM retention. By fostering stronger relationships with the next generation, Rossi Family Office Services positioned itself for long-term growth and sustainability.
Key Takeaways
- Proactive Engagement is Essential: Don't wait for inheritance to engage with the next generation. Start building relationships early and often.
- Financial Literacy is Key: Provide younger family members with the financial knowledge and skills they need to understand and manage their wealth effectively.
- Personalization Matters: Tailor your approach to meet the specific needs and interests of each individual family. Utilize technology for effective communication and program delivery.
- Measure and Refine: Track engagement metrics and AUM retention to measure the effectiveness of your program and make adjustments as needed.
- Invest in Technology: Leverage technology to streamline communication, deliver educational content, and track engagement metrics.
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