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Who ’ ll Manage Your Clients ’ Wealth When It Passes To Their Heirs ?
Without effective estate planning , it might not be you .
By Keven DuComb
NEXT-GENERATION INVESTORS ARE about to receive a significant portion of “ the great wealth transfer ” over the next 20 years . And those who don ’ t have a relationship with their parents ’ financial advisor and some solid planning already in place will likely be looking for someone new to help them manage those assets .
Opinions vary on the details of the impending wealth transfer , but the fact is that baby boomers are set to pass an unprecedented amount of accumulated wealth — estimates go as high as $ 90 trillion — over the next 20 years to their heirs . Some say this transfer is already underway , which means the time is now for advisors to think about how they are positioning their practice to retain the wealth that ’ s being transferred .
Establishing Generational Relationships
While the children and grandchildren of older clients may not fit the ideal client profile yet , and advisors may not be focused on working with them today , they should be . Next-gen investors already need and want financial advice , and as they look to establish a relationship with an advisor , they will undoubtedly find one — and stick with one — who is attuned to their needs .
One easy way to establish relationships with the children of clients is to help them with estate planning , since it will be required to ensure clients ’ assets are passed on and received efficiently . By including children and grandchildren in discussions , financial advisors can better engage with their clients , strengthening relationships and retaining that next generation .
Closing The Estate Planning Gap
According to research from Fidelity , advisors have reached out to just 13 % of clients ’ children . Advisors can look at this gap as a huge opportunity to reach out to clients . The same research shows that households in which the next generation is engaged generate 160 % of the revenues and 270 % of the profits when compared with households that don ’ t have any family engagement .
Research on next-generation investors suggests they are different from their elders and their needs are unique — in everything from their financial priorities and values to the way they want to interact with a financial advisor to how they find and share information .
By leaning into estate planning with clients and their children and grandchildren , advisors can come to understand these preferences and consider how to align their offerings accordingly . Here are a few ideas about the ways advisors can do this :
1 . They can assess the existing estate planning capabilities of their practices . Ask yourself if you have the right team members and technology in place to offer valuable estate planning services that will help you connect with next-gen clients . Given that they have specific concerns — about their ability to take care of family members , for instance , or about having enough time and money — do you offer the things that can address their needs
54 | FINANCIAL ADVISOR MAGAZINE | SEPTEMBER 2024 WWW . FA-MAG . COM