Are You Prepared for the ‘Great Wealth Transfer’?

Possibly the single largest wealth transfer in history is now under way. And as a result, so is one of the greatest shifts in wealth management.

The Baby Boom Generation has started to pass along its accumulated assets to their children and grandchildren, a process that will continue for, at least, the next few decades. When done, an estimated $30 trillion  in wealth will be transferred from one generation to the next.

With this tremendous movement of assets comes a challenging moment for many financial advisors. The key is earning the loyalty of that next generation, be they Generation X or Millennial heirs, because if recent studies are correct, most children will promptly fire their parents’ advisors.

According to an InvestmentNews survey , 66% of children fire their parents’ financial advisor after they inherit their parents’ wealth.

While the perception is that Gen Xers may be more inclined to drop their parents’ advisors than Millennials, a recent CNBC article  notes that “Millennials most certainly don’t want to use their parents’ financial advisor, due to issues of relatability. Every child wants to rebel a bit.”

Not only are their Baby Boomer clients growing older, but the financial advice industry is aging as well, and many younger heirs and their parents’ advisors may have a hard time relating across the generational divide. On top of relatability issues, many of those heirs may also want to enhance their wealth management experience through a combination of self-directed digital tools, while still having access to human advisors.

Some advisory firms have taken steps to meet this challenge by hiring younger advisors and adding robo-advisor platforms with lower minimums. Others have begun building relationships with the adult children of clients by having them participate in family meetings and helping them work through their own financial issues, like managing student loan debt and buying their first home.

Whether an advisor’s clients represent an older or younger generation, it is important to uncover the expectations of both parents and their adult children. Now is the time for advisors to take on the opportunity to learn more about each generations’ wants, needs, and goals, improve their service to existing clients, and make themselves more attractive to the next generation of clients.



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