How Financial Planners Can Prepare for the ‘Great Wealth Transfer’

Currently, the largest single wealth transfer is beginning, as retiring baby boomers start passing down roughly $30 trillion in assets to their children and grandchildren, CNBC reported. Other sources peg this number even higher: reported that an estimated $1 trillion will move between generations every year for 50 years. Regardless of the actual amount transferred, the fact remains that as demographics change and younger generations inherit their elders’ wealth, there will be a seismic shift in who holds the vast majority of assets in the country.

This ‘great wealth transfer’ that is currently underway will ultimately create many competitive possibilities for financial planners. As noted by CNBC, research shows that more often than not, when wealth transfers generations, the younger cohorts have a tendency to change financial advisors. While some planners might end up losing business, there will still be a wide range of opportunities for other ones to end up with a significant amount of new business.

shutterstock_54515653With the financial planning industry becoming extremely fluid throughout the next decade, professionals in this sector need to be ready to face the risks associated with obtaining revenue tomorrow versus making it today.

Maintaining the current client base

Estate planning is one of the main ways to protect the accumulated wealth of a client. By utilizing trusts, life insurance products and other instruments, planners can help their clients avoid estate taxes that can greatly diminish the amount of money clients leave for younger generations.

“Creating a robust wealth transfer plan for clients ensures a means for helping to maintain family harmony.”

However, going above and beyond a simple estate plan and creating a robust wealth transfer plan for clients also ensures a means for helping to maintain family harmony while empowering the children and grandchildren to make better decisions after their elders have passed. Often, after years, sometimes decades, of waiting to inherit, when the younger generation finally does gain access to the family wealth, they mismanage it and lose it.

Financial planners working with high net worth clients need to engage with multiple generations to not only ensure the younger ones don’t mismanage their assets, but also that they don’t seek out new professionals to work with. As noted by, it can even be a wise idea for planners to maintain a healthy relationship with the main wealth creator, while also hiring younger professionals to come in and work with the next generation.

Attracting the next generation of clients

While some financial planners will need to remain diligent in holding onto multigenerational clients, others will be seeking ways to attract the newly wealthy. Clients of the next generation might not have the money to pay the bills right now, but they may eventually be inheriting a significant amount of assets in the coming years. It’s always important to keep an eye on the future, while still connecting with your current clients.

According to ThinkAdvisor, the average age of financial planners is currently 58 or 59 years old. However, younger generations may want to work with people in their own age brackets. The source recommended creating mentorship programs where senior planners can work with younger ones to not only provide experience and a hands-on approach to training the next generation of financial planners, but also to demonstrate to younger potential clients that they will have a seamless transition of professionals working on their accounts.

“It might be wise to modify the firm’s culture and organization for the next generation.”

Further, the source noted that technology is key when dealing with the next generation of high net worth individuals. Younger high net worth individuals want and expect a seamless experience across all their digital platforms and mobile devices. These clients demand touch points across all channels with each one picking up where the previous interactions left off. Further, not only do they want this experience to be seamless, they also require that this omnichannel approach be optimized depending on the device.

Finally, if necessary, it might be wise to modify the firm’s culture and organization to meet the demands and expectations of the next generation. Many younger individuals prefer a casual setting and a laid-back atmosphere in their business dealings. An office that is too stuffy or stuck in the past, might turn away the next generation of high net worth individuals. This could be as easy as relaxing the dress code in the firm.

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