Growing Through the Great Wealth Transfer

The great wealth transfer seems finally to be here. Advisors across North America are reporting assets leaving their firms when spouses or, to a greater extent, adult children, inherit wealth. And as older age groups shrink, younger ones are making up more of the population, and more of the target market for IAs. 

But this intergenerational transfer is not an overnight phenomenon and, for firms who are well-positioned, it can be more an opportunity than a threat. Here are some of the areas growing firms are focusing on.

Relationship Management

Most IAs are placing particular importance on relationship management as a method of managing generational attrition, but some are going a step further. By shifting the way they think about the people they serve, growing IAs are recategorizing high-value clients as client families.  

This often entails:

• Ensuring both members of the marriage or partnership are involved in communications and decision-making
• Hosting structured intergenerational discussions that include the next generation
• Forming personal relationships with rising generations through family wealth services as well as client events

Wealth Transfer Services

The “client family” approach is not only about communication and relationships, it’s also about wealth planning—seeing the client’s whole financial picture as a multigenerational one that encompasses the considerations of surviving spouses as well as adult children. 

This often entails:

• Considering topics like tax and estate, philanthropy and next gen planning not as value-adds, but as part of the core process of managing wealth
• Defining the client family’s vision for life, legacy and future generations
• Leveraging professional networks to provide estate planning and beneficiary support 

Next Generation Services

96% of IAs prioritize individuals in their 50s and 60s, but the population is shifting and having services that help those in a younger bracket could help you not only retain assets, but also attract assets that are moving from firms with a less relevant service focus. That’s why some IAs are offering future inheritors more tailored services, despite their lower asset level in the short term.

This often entails:

• Waiving asset minimums for children of existing high-value clients
• Defining a planning process around the needs of rising generation clients, like education planning, financing strategies and long-term growth
• Offering guidance on the challenges of being a beneficiary and managing inherited wealth

The great wealth transfer is a rare period of mobility in an industry with a shrinking target market and consistent client loyalty. Having a plan for intergenerational assets is a necessity, but it’s also a chance to attract new client families who do not often consider changing advisors. So firms who position themselves well, and make their value clear to those considering a move, stand to benefit greatly over the coming years.

Reach out to us if you’re looking for direction as you form your intergenerational asset strategy.