PowerPoint (Standard)

PowerPoint (Standard)

P L A N N I N G , FA M I LY D Y N A M I C S A N D E D U C AT I O N Engaging the Rising Generation of Wealth Stewards Global Family Office Conference London | June 9, 2016 Patricia Armstrong | Senior Director A Wells Fargo Business 1 INTRODUCTION THANK YOU FOR THE KIND INTRODUCTION, KHALED, AND GOOD MORNING. IT IS MY PRIVILEDGE TO BE WITH YOU TODAY TO SHARE SOME HIGHLIGHTS FROM RECENT QUALITATIVE RESEARCH THAT ABBOT DOWNING HAS UNDERTAKEN WITH OUR CLIENTS BETWEEN THE AGES OF 18 AND 35 -- INDIVIDUALS SOMETIMES REFERRED TO AS MILLENNIALS -- WHO WE THINK OF AS THE RISING GENERATION OF WEALTH INHERITORS AND STEWARDS. OUR RESEARCH GOAL IS TO INVITE AND LISTEN TO THEIR VOICE BOTH AS CLIENTS AND FUTURE FAMILY LEADERS.

OUR RESEARCH IS ONGOING. THIS MORNING I WILL SHARE PRELIMINARY FINDINGS AND OBSERVATIONS BASED ON FEEDBACK FROM 25 CLIENTS WHO FALL WITHIN THIS AGE RANGE, INCLUDING ONE 37-YEAROLD. AS CONTEXT, ABBOT DOWNING IS A US-BASED MULTI-FAMILY OFFICE OWNED BY WELLS FARGO BANK. OUR CLIENTS ARE TYPICALLY FAMILIES AND FAMILY OFFICES WHO ARE MANAGNG UNIQUE WEALTH FOR THE BENEFIT OF FUTURE GENERATIONS, THUS OUR INTEREST IN STEWARDSHIP. OUR FOUR-PERSON FAMILY DYNAMICS AND EDUCATION TEAM OFFERS CONSULTATION AND DESIGNS EDUCATIONAL EXPERIENCES FOCUSED ON THE PREPARATION OF HEIRS AS PART OF OUR CLIENT EXPERIENCE. 2 INTRODUCTION (CONTINUED) WE DO THIS BECAUSE OF BOTH PRIOR RESEARCH REGARDING BEST PRACTICES IN THE MULTIGENERATIONAL TRANSITION OF WEALTH, AS WELL AS FEEDBACK FROM OUR CLIENTS THAT THEY WISH TO TAKE AN INTENTIONAL APPROACH TO THE PREPARATION OF THEIR HEIRS. THE GOAL WE SHARE WITH OUR CLIENTS IS SIMPLY THAT OUR CLIENTS GOOD FORTUNE NOT INADVERTENTLY RESULT IN UNINTENDED CONSEQUENCES OR MISFORTUNE FOR THEIR CHILDREN AND GRANDCHILDREN. OVER THE PAST TWO YEARS OUR CLIENT LISTENING RESEARCH HAS INCLUDED IN DEPTH INDIVIDUAL INTERVIEWS AND FOCUS GROUPS DESIGNED TO CHECK OUR ASSUMPTIONS REGARDING HOW CLIENTS IN THEIR 20S AND EARLY 30S WISH TO ENGAGE ABOUT THEIR WEALTH AS THEY TRANSITION INTO ADULT

ROLES AND RELATIONSHIPS, AND ASSUME GREATER RESPONSIBILITY FOR THE MANAGEMENT OF FAMILY FINANCIAL ASSETS. ILL HIGHLIGHT SOME FINDINGS WITH THE HELP OF A FEW SLIDES, AND LOOK FORWAD TO TAKING YOUR QUESTIONS DURING OUR PANEL DISCUSSION. 3 SLIDE 1: T H E R I S I N G G E N E R AT I O N A R E T H E F U T U R E THIS FIRST SLIDE SIMPLY ILLUSTRATES THE WELL-KNOWN POINT THAT THERE IS A SIGNIFICANT SHIFT IN THE CONTROL OF WEALTH UNDERWAY, AND THAT MILLENNIAL CLIENTS IN THE 18-35 AGE RANGE REPRESENT A COHORT EVEN LARGER THAN THE BABY BOOMER GENERATION. THESE ARE US DATA, BUT CERTAINLY REFLECT GLOBAL TRENDS. WE ALSO THINK ITS IMPORTANT TO VIEW MILLENNIAL CLIENTS NOT JUST AS INHERITORS OR SPENDERS OF THEIR FAMILYS WEALTH, BUT AS WEATH

CREATORS THEMSELVES. RECENT ECONOMIC DATA SUGGEST THAT THIS GROUP IS CREATING SIGNIFICANT WEALTH IN THEIR OWN RIGHT THROUGH INDEPENDENT BUSINESS VENTURES AND CREATIVE EXPANSION OF FAMILY BUSINESSES. WE CERTAINLY HEARD FROM OUR CLIENT SAMPLE THAT THEY HOPE TO GROW RATHER THAN DEPLETE THEIR FAMILYS WEALTH AND WANT TO LEARN WAYS TO DO THAT EFFECTIVELY ON BEHALF OF THEIR OWN CHILDREN. T H E R I S I N G G E N E R AT I O N A R E T H E F U T U R E $30 Trillion is expected to transfer to the next generation in the next 30 years. Boomers Gen X and Y Combined Current Population 75.6 million

130.6 million Current Spending Power $2.5 trillion $2.6 trillion 2018 Projected Net Worth $46 trillion $28 trillion Millennials 76m X 54m

Boomers 75m Silent 40m 1981 - 1999 1965 - 1980 1946 - 1964 1925-1945 2015 Wells Fargo Bank, N.A. All rights reserved. 5 SLIDE 2:

H O W I S S T E WA R D S H I P N U R T U R E D ? I SHARE WITH YOU NEXT ONE OF OUR FAVORITE SLIDES WHICH GRAPHICALLY DEPICTS AN ASSUMPTION THAT THERES AN AGE AT WHICH YOU CAN TRANSITION WEALTH AND THE RECIPIENT WILL SOMEHOW KNOW HOW TO BE A WISE STEWARD. EACH OF THE MILLENNIAL CLIENTS WEVE SPOKEN WITH HAS BOTH SOME ANXIETY ABOUT THE RESPONSIBILITIES AHEAD AS WELL AS AN EAGERNESS TO LEARN AS MUCH AS THEY CAN REGARDING WISE FINANCIAL MANAGEMENT ILL GIVE YOU SOME EXAMPLES ON THE FOLLOWING SLIDES. 6 H O W I S S T E WA R D S H I P N U R T U R E D ? Image used with permission 7

SLIDE 3: MILLENIALS THIS NEXT SLIDE CAPTURES SOME OBSERVATIONS ABOUT OUR MILLENNIAL SAMPLE THATS DESIGNED TO DEPICT SOME OF THE STRENGTHS THEY BRING TO THEIR RESPONSIBLITIES AS WELL AS SOME EXPECTATIONS SUCH A REAL-TIME, PRACTICAL, TECHOLOGY-ENABLED INFORMATION. FOR EXAMPLE, A SAMPLE QUOTE IS SEND ME A E-MAIL THAT SAYS IM SENDING YOU THIS PERFORMANCE REPORT AND THIS IS WHY. TELL ME THAT ILL NEED TO PAY PARTICULAR ATTENTION TO LINE 10 ON PAGE 5 WHICH BOTTOM LINES IT FOR ME. OR, MAYBE WE COULD DO A WEBINAR WHERE YOU SHARE A SAMPLE OF THE REPORT AND GO THROUGH WHAT I SHOULD BE PAYING ATTENTION TO SO I CAN ASK QUESTIONS. WE HEARD A PRACTICAL AND ASSERTIVE APPROACH TO TAKING IN INFORMATION. 8 MILLENNIALS Sources: Abbot Downing Client Listening; Jamie Notter & Maddie Grant, When Millennials Take Over (2015) 9

SLIDE 4: W H AT M I L L E N I A L S WA N T F R O M U S THIS NEXT SLIDE SUMMARIZES SOME OF WHAT WE HEARD FROM OUR SAMPLE. THERE ARE TWO POINTS ID LIKE TO HIGHLIGHT. THE FIRST IS IN THE LOWER LEFT: IN BOTH OUR OWN RESEARCH AND IN OTHER RECENT REPORTS, WE CONSISTENTLY HEARD THAT CLIENTS ARE LOOKING FOR A STRONG PERSONAL, ADVISORY RELATIONSHIP TECHNOLOGY IS EXPECTED TO ENABLE THAT RELATIONSHIP BUT IS NO SUBSTITUTE. AS AN EXAMPLE, ONE OF OUR INTERVIEWEES SAID, THE ONLY REASON I PARTICIPATED IS BECAUSE MY ADVISOR ASKED ME TO.I TRUST HIM AND THEREFORE TRUSTED THAT THIS EXPERIENCE WOULD BE OKAY. EXCHANGE. THE SECOND HIGHLIGHT IS THE VALUE OF PEER FEEDBACK AND WEVE TESTED A COUPLE OF PEER FORMATS THAT HAVE BEEN VERY WELL RECEIVED AND ILL SAY MORE ABOUT THAT IN A MINUTE.

10 W H AT M I L L E N N I A L C L I E N T S WA N T F R O M U S Engaging and fun Visuals & summaries Share what other clients like me are doing Respect my boundaries Connect on a personal level. Authenticity trumps age! Be accessible. I expect a response by the end of the day Provide opportunities for

networking and peer exchange 11 SLIDE 5: C O M M U N I C AT I O N P R E F E R E N C E S WE ASKED ABOUT COMMUNICATION PREFERENCES AND HEARD LOUD AND CLEAR YOU SEND US WAY TOO MUCH PAPER. THIS IS AN OBVIOUS CHALLENGE WITH INCREASED REGULATIONS BUT FINDING A BALANCE IS CLEARLY AN IMPORTANT GOAL. YOULL SEE SOME OTHER TIPS THAT WONT SURPRISE YOU OTHER THAN PERHAPS THE PREFERENCE FOR FACE-TO-FACE MEETINGS WHICH IS TIED TO THE PREVIOUS POINT ABOUT A DESIRE FOR PERSONAL, TRUSTED RELATIONSHIPS, AND OF COURSE A DESIRE TO BE ASKED ABOUT PREFERENCES RATHER THAN MAKING ASSUMPTIONS, WHICH TIES BACK TO THE POINT OF THIS RESEARCH. 12 C O M M U N I C AT I O N P R E F E R E N C E S

9 10 out of prefer face to face Dont bother leaving a voicemail Show me Save a Tree (Electronic vs Paper) versus tell me

Text Only to remind me of meetings or to tell me to check my email Do not assume. Ask me. Give it to me short & concise The Morgan Stanley Private Wealth Management/Campden Wealth Next Generation Wealth Report 2014 Family Office Exchange, Engaging the Client of the Future Abbot Downing Client Listening 13 SLIDE 6:

E D U C AT I O N A L T O P I C S O F I N T E R E S T WE ARE COMMITED TO OFFERING EDUCATIONAL EXPERIENCES, AND WANTED TO UNDERSTAND WHAT WOULD BE OF GREATEST VALUE. THIS SLIDE HIGHLIGHTS A FEW TOPICS. AS AN EXAMPLE, AT A RECENT GATHERING FOR SOME OF OUR RISING GENERATION CLIENTS THE MOST WELL ATTENDED BREAKOUT SESSION WAS ON MONEY & RELATIONSHIPS. CLIENTS TOLD US HOW MUCH THEY APPRECIATEDTHE OPPORTUNITY TO DISCUSS THIS TOPIC IN A SAFE SETTNG WITH PEERS WHO HAD SIMILAR CONCERNS. OTHER INTER-RELATED TOPICS ARE TRUST, TAXES AND DEBT. FOR EXAMPLE UNDERSTANDING WHY YOU MIGHT TAKE ON A MORTGAGE EVEN THOUGH YOU COULD MAKE A TRUST WITHDRAWAL. WE WERE IMPRESSED WTH THE THOUGHTFULNESS OF THESE QUESTIONS AND WHAT THEY SIGNAL FOR FUTURE STEWARDSHIP STRENGTH. 14 E D U C AT I O N A L T O P I C S O F I N T E R E S T

MONEY & RELATIONSHIPS TRUST FUNDAMENTALS MERGING FINANCES TAX IMPLICATIONS OF WITHDRAWALS DEBT: WHATS A GOOD AMOUNT? UNDERSTANDING INVESTMENTS & INVESTMENT REPORTS

PLANNING STRATEGIES: GETTING STARTED Source: Abbot Downing Client Listening 15 SLIDE 7: IN CONCLUSION I WILL CONCLUDE WITH THREE POINTS: 1. THE MILLENNIAL CLIENTS IN OUR SAMPLE WANT ADVICE AND INFORMATION 2. THEY ARE LOOKING FOR EDUCATION ABOUT FUNDAMENTALS IN AN ENGAGING AND DIGESTABLE FORMAT THEY LIKE LEARNING FROM PEERS AS WELL AS PROFESSIONALS, AND 3. THEY LIKE BEING ASKED THANK YOU AND I LOOK FORWARD TO OUR DISCUSSION.

16 IN CONCLUSION The good news is millennial clients want your help and advice They are looking for education but want it presented in a digestible format with examples and visuals It is important to not assume how your millennial clients want to be communicated with. ASK THEM Create a Millennial engagement strategy focused on your clients and relationship teams

17 CONTACT INFORMATION [email protected] www.abbotdowning.com DISCLOSURES Abbot Downing, a Wells Fargo business (Abbot Downing), provides products and services through Wells Fargo Bank, N.A. and its various affiliates and subsidiaries. The information and opinions in this report were prepared by Abbot Downing. Information and opinions have been obtained or derived from sources we consider reliable, but we cannot guarantee their accuracy or completeness. Opinions represent Abbot Downing's opinion as of the date of this report and are for general information purposes only. Abbot Downing does not undertake to advise you of any change in its opinions or the information contained in this report. Wells Fargo & Company affiliates may issue reports or have opinions that are inconsistent with, and reach different conclusions from, this report. Wells Fargo & Company and its affiliates do not provide legal advice. Please consult your legal and tax advisors to determine how this information may apply to your own situation. 2015 Wells Fargo Bank, N.A. All rights reserved. Member FDIC

A Wells Fargo Business Investment and Insurance Products: Are NOT insured by the FDIC or any other federal government agency Are NOT deposits of or guaranteed by the Bank of any Bank affiliate MAY Lose Value 19

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