Family Affair: Applied Succession Planning
by Carolyn S. Ellis Ray Harrison entered the life insurance business 38 years ago in
L&HA Features Editor
Michigan. His practice, now based in suburban Sacramento, has evolved to
comprehensive planning for families and their heirs. L&HA talked with Ray about
the value he places on next-generation clients and how he creates and maintains
relationships with them.
LHA: You have made client succession a pivotal part of sustaining and growing your
financial planning practice. We’re eager to hear how you keep it all in the
RH: Succession financial planning is a great topic for us. As I said in a Fox
Business interview last fall, in our country we now have the greatest wealth
transfer of all time. The Greatest Generation is transferring money to their
children, who I might call the greatest generation in spending.
L&HA: Every practice is as special as its founder and principals. Tell us about
RH: Our practice is built around being proactive on the investment side (our motto is
“advance and protect”) and anticipating everything our clients could need. Plus
we do some unique things. Take our client meeting rooms. Three of them have travel
themes – a sidewalk café in Paris, a vacation in the tropics, and a trip to
We are 100% referrals. We don’t do outside advertising, and we don’t do public seminars. If
you don’t love your clients they are not going to be the strength that helps
you leverage and build your business. We see people getting ready to retire and
no one has ever asked them what they really want to accomplish in their
lifetime. We’ve had clients tell us they want to change careers or start
missionary or charitable endeavors.
We give birthday and anniversary parties for some clients. These could be for an
important wedding anniversary or for the years they have worked with us. We
keep the parties small, just their children and closest friends. We ask their
children to talk about them and we emcee. If someone at the party asks what we
do, it comes out naturally that we have been their financial advisor for
20-plus years; that often leads to a referral.
L&HA: What brought you to your deep personal commitment to this work?
RH: My dad died when I was 19 years old, newly married and going to college. He left us
with nothing — no insurance and no financial plan. I had to support my mother.
We have a lot of “adopted moms” in our practice. We are sometimes closer than
L&HA: Having the right staff must be important to delivering this level of service to
RH: I have a great team that supports me, some for more than 20 years. A few years ago Brian Peardon joined the firm; he is younger than I and the leading part of the succession plan. We want everyone
on our team to work with their natural strengths so with new hires we use the
Kolbe ATM Index. It’s an online test, a 36-question assessment that shows a person’s instinctive
method of problem solving. It shows, for example, if you are a visionary type
or a detail-oriented implementer.
L&HA: It sounds like you know your clients and their situations very closely.
RH: We don’t think a plan is complete with investment strategy; it also should deal with
future distribution. Sometimes it isn’t leaving the money outright to the
children but leaving it to take care of the children. Some clients have tough situations.
Dad has died. Mom is in her 80s or 90s. She has a 50- or 60-year-old child who is
coming back needing money all the time. It’s difficult to say to our seniors,
“You have to stop this. The children have to grow up.” Privacy is critical when
you work with multiple generations as we do. Know the client’s ground rules — what
they want shared (and don’t) and who should know.
What level of assets do you require new clients to have?
RH: We like
new clients to have investable assets of $500,000 that we are managing, but we bend
the minimums for children of our clients. The parents appreciate that. They
want us to be involved in teaching and training their families. One of our
client events is a two-part seminar, “Passing the Baton.” For the first session
we have the parents come. If they want, they bring their children or successor
trustee to the second half. We go through what happens when someone is becoming
financially or mentally incompetent or passes away. Most advisors have clients
name two successor trustees. We ask our clients for a deep list and we get to
know everyone. These days two is not enough.
Do you offer other in-house programs?
RH: A local
photographer gives a very popular seminar on how to use your digital camera.
Our clients always bring friends. For our A+ clients, we open an electronic vault
where they store scanned documents and photos of important things. We produce a
CD so they have copies handy. We have clients who were on a trip when their
passports were stolen. They logged into our system and got copies of their
passports for the local embassy so they could return to the U.S.
how many seniors are Internet savvy. We give a seminar by an IT specialist
every year on identify theft and protecting yourself online. We are showing clients
how they can get Internet access through our website to electronic statements
because companies are starting to charge for paper statements in 2011.
How do you remain efficient when you are so high-touch?
RH: I love
the mobile scribe software called Copytalk. It’s a dictation system which
utilizes a live person to transcribe. As soon as I leave every interview I
dictate a meeting summary (up to six minutes). An hour or two later, I receive
an e-mail with typed notes that that my staff files and uses to assign and
track action items.
webcams at our workstations and in our theme rooms. We conduct interviews with
clients long-distance and conference with out-of-state family members. Sometimes
I give clients a webcam. They also use them to talk to their
How likely is it that adult children will stay with their parents’ advisor
given the geographic range of today’s families and the fact that most are
mature adults when they inherit?
RH: We keep
a pretty high percentage, probably 80%. If the adviser hasn't already reached
out to the children, they will find someone nearby up to one third of the time.
If the next generation knows mom and dad trusted you (and the parents have
said, it's our request that you work with Ray) they will have you continue to
manage the assets. We have younger clients whose own assets were under six
figures and when mom and dad died they inherited a million dollars or more. If
we have been working with them successfully through the lean years they will
stay with us. We are earning the right, not assuming, that we will continue to
do financial planning for the children of our clients. It comes back to
relationship. All in all we have found great people have great children.