7 Proven Strategies to Win at The Great Wealth Transfer

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Understanding The Great Wealth Transfer

The Great Wealth Transfer refers to the intergenerational transfer of wealth and financial assets that is currently underway in the United States, Canada, and other nations, with the baby boomer generation leaving behind (“transferring”) significant amounts of wealth and assets to their heirs (spouses, children, and grandchildren).

Who will benefit from The Great Wealth Transfer?

The heirs and recipients that will benefit from The Great Wealth Transfer will primarily include members of Gen X (those born between 1965 and 1980), Millennials (1981-1996) and Gen Z (1997-2012).

According to Cerulli Associates, wealth transferred through 2045 will total an estimated $84.4 trillion. More than $53 trillion of this amount is estimated to be transferred from households in the Baby Boomer generation, representing a whopping 63% of all wealth transfers. 

Perhaps more significant, or alarming, is that more than 70% of heirs to this wealth are likely to fire or change financial advisors after inheriting their parents’ wealth. On the high end, we’ve seen this number be quoted as high as 88%.  

This has massive implications for how firms approach all areas of their business, including technology, to engage with and attract the next generation of investors and clients. Not to mention that the majority of advisors are not prepared to engage with the next generation; some of them, not in the slightest.  

This impending challenge also presents a real opportunity for firms and advisors to demonstrate their value and cement trust across generations.  

How can I prepare my firm, our advisors, and our clients for The Great Wealth Transfer?

The 84.4 trillion dollar question.

Given what we know about The Great Wealth Transfer, including expectations of the current and future generations of clients, there are undoubtedly proven strategies to help prepare firms, advisors, along with clients and family members. These strategies include aligning values and business practices, implementing a Client Life Management digital vault, engaging with the spouse, holding family meetings, and so much more.

Below are seven proven wealth transfer strategies that will help firms and their advisors better engage with clients and family members to win The Great Wealth Transfer.

7 Proven Wealth Transfer Strategies to Win Over the Next Generation 

Based on countless conversations with firms, advisors, industry experts and consultants, in addition to reviewing and familiarizing ourselves with surveys and reports, we’ve identified the below 7 tried-and-true strategies to engage with and improve chances of retaining the next generation as clients.  

1. (Re)Aligning Business Values, Practices, and Resources 

First and foremost, wealth management firms (wirehouses, credit unions, IBDs, RIAs, Family Offices, you name it) and financial advisors absolutely must to take a step back to realign their business values and ensure that they meet the values and goals of this next generation. 

There are four critical areas that your firm should be evaluating and re-evaluating on an ongoing basis.

1. ➜ Business Processes 
2. ➜ Communication Channels 
3. ➜ Engagement and Service Models 
4. ➜ Human Resources 

Of these four areas, what we’ve found is often very overlooked is human resource allocation. 

The question to ask yourselves internally is, “Do we have the right staff and advisors to effectively engage with the next generation?”.  

Recently, our team met with a mid-sized RIA, who openly acknowledged that their firm felt they were unequipped to adequately engage with the next generation. As a result, they ended up hiring two young, up-and-coming associate advisors who had much more in common with their younger clients and soon-to-be clients. These next-gen advisors are now responsible for much of the wealth transfer conversations wherever and whenever the next-gen is involved and for any young prospective clients that are interested in working with the firm.  

While there may be several examples like the above taking place across the industry, it really still is a topic that needs to be talked about.  

In fact, one of the key takeaways from FinancialPlanning.com’s recent research on Wealth Transfer Strategies, highlights the importance of a “fresh face”, stating that firms need to hire young advisors who can appeal to younger clients.  
According to the study, only 13% of smaller firms are deploying this strategy, versus 50% of the larger firms. One advisor (from an RIA) referenced in the report said that “not having enough young advisors” had prevented their firm from attracting and serving more young clients. 

2. Intergenerational Continuity Planning 

An intergenerational continuity plan is a comprehensive financial plan outlining how a family’s wealth will be managed and transferred to soon-to-be heirs and future generations. 

This plan provides a detailed roadmap for managing and transferring wealth that aligns with the family’s goals and objectives. 

Creating and maintaining an intergenerational continuity plan not only helps to retain assets, but importantly facilitates the transfer of knowledge, expertise, and critical information to family members, and in doing so, to Advisors as well.  

It’s really the information, data, and documentation that is foundational to everything and paves the way for pieces of the plan to come together.   

This is exactly why having a structured information management plan (and a digital vault, notably) in place and providing family members with access to this information is one of the biggest components of any continuity and succession plan.  

Below are the 5 key “steps” or components of an Intergenerational Continuity Plan:

  1. ➜ Understand clients’ goals and objectives 
  1. ➜ Involve key family members (and Trusted Advisors
  1. ➜ Develop the intergenerational plan 
  1. ➜ Educate clients and the next generation 
  1. ➜ Monitor, review, and adjust the plan 

3. Hosting Multi-Generational Family Meetings 

Family Meetings are a tried-and-true approach that plays an incredibly important role in helping advisors create an intergenerational continuity plan while making sure that the plan is maintained.  

Family Meetings, when done right, should encourage necessary family members to participate in discussing critical areas such as goals and values, transfer strategies, legacy and estate discussions, family assets and wealth, and more. 

The benefits you gain from hosting family meetings speak for themselves:

  • ➜ Retention of relationships and assets;  
  • ➜ A better understanding of family dynamics and information;  
  • ➜ Building generational trust;  
  • ➜ Increasing the value of your practice and preparation for your own succession planning as an advisor  

Advisors in financial services and wealth management have a unique opportunity to foster meaningful family discussions and ensure smooth wealth transitions by following the below 6-step “blueprint” to hosting Family Meetings:

  1. ➜ Preparation 
  1. ➜ Creating a safe environment for the family 
  1. ➜ Establishing the family’s goals and their values 
  1. ➜ Educate and empower clients and the next generation 
  1. ➜ Develop the Wealth Transfer Plan 
  1. ➜ Ongoing documentation and review  

As you’ll see, Intergenerational Continuity Planning and Family Meetings have a lot of overlap. To maximize your output and return, these two should be carried out in tandem as part of the overall strategy.  

An important consideration and takeaway: Your role as the Advisor in these Family Meetings is not to hijack them or focus on your agenda — you are acting as the family’s Trusted Facilitator. It is your job to facilitate the conversation, to make everyone feel comfortable, and to encourage dialogue and participation from family members that will ultimately serve to help everyone in the family better understand the dynamics that will lead to a successful wealth transfer. 

Yes, Family Meetings can be a lot of work. But the reward is invaluable.  

4. Engage with the Spouse 

Do you or does your firm have any sort of relationship with your clients’ spouses at all?  

Unfortunately, the majority would answer no to this question.  

The spouse is frequently overlooked and often excluded from the overall financial picture and relationship with the family’s financial advisor. This oversight can be detrimental to the overall well-being of the family’s financial situation — and for several reasons. One of the most critical reasons is that neglecting the spouse’s involvement can result in an incomplete understanding of the family’s financial dynamics and overall goals, leading to incomplete and less-than-ideal planning.  

Including the spouse in things such as quarterly or annual meetings and plan, reviews is key for firms and advisors to build trust and maintain long-term relationships with the family. By recognizing the spouse’s role and actively engaging them in the financial planning process, advisors demonstrate a commitment to the family unit, fostering a sense of inclusivity and collaboration. This approach not only helps ensure that all stakeholders are heard and understood but also provides a comprehensive view of the family’s financial objectives, enabling advisors to tailor their strategies more effectively.  

When in doubt, look for opportunities to deepen relationships and establish trust. What we’ve seen is that client appreciation events can make for a great way to encourage participation and meet additional family members. Hint: make these events about your clients, not your firm.  

5. Engage with and Educate Clients (and the Next Generation) 

Fact: Lack of communication and engagement is the number one reason clients leave their Wealth Advisors. 

Basic financial literacy and education build trust, lead to financial wellness, and importantly, go the extra distance with the next-gen. 

But it’s not just any type of communication and ”education” that clients crave and seek, it needs to be tailored. It needs to be specific and personalized. And it needs to be relevant to them, to their current and future lifestyle.  

When it comes to the top advisors and top firms, they’re active — they’re using digital channels to communicate several times a month with their clients and with their prospects.  

A really important takeaway here is to think about how your firm is currently communicating with clients and to ask if there is an opportunity for more or rather, better, education that will help clients understand certain topics and then essentially bring them back to you. 

When you’re discussing this internally, approach it with a general framework of the ‘3 C’s’: 

  1. Content that you’re delivering 
  1. Channels that you’re communicating on (email, social, text); and  
  1. Cadence — how frequent is this communication and does it reflect or align with your client’s goals 

If you’re looking for support and technology to empower your comms and marketing engagement, there are lots of partners available to help. Fresh Finance provides a robust library of affordable educational content for events and ongoing communications, and ReachStack provides an easy way to deliver the right content to the right person at the right time. 

These programs deliver real impact for existing clients and importantly, for the next generation. Here’s a recent article showing the impact these programs can have for Wealth Management firms. 

6. Deliver Tax-Efficient Solutions 

Households are expected to transfer ~$85 trillion to their heirs and charities by 2045.  

As a result of the massive amounts of wealth transferring and being passed down generations, tax efficiency is becoming increasingly important given most of the wealth is held by older, high-net-worth (HNW) investors and will likely be subject to more expansive taxes in the coming decade. 

Firms that can remain on the cutting edge of complex planning and wealth structuring solutions will be invaluable to clients as taxation becomes a more pressing worry. And here’s what this looks like:  

  • Minimizing tax liability: High net-worth families often have a substantial amount of assets and wealth, and without careful planning, a large amount of their wealth could very easily be eroded by taxes. When you’re focused on tax efficiency, you can help families mitigate their tax liability and preserve more of their wealth for future generations. 
  • Maximizing wealth transfer: Effective tax planning enables high-net-worth families to transfer their wealth to heirs and beneficiaries in the most efficient manner. This one really boils down to beneficiaries receiving the maximum benefit.  
  • Preserving family legacy: Wealth transfers involve passing on financial assets AND family legacies, values, and aspirations. By implementing tax-efficient strategies, you can help protect and preserve the family’s legacy for future generations, ensuring their goals and values are upheld. 
  • Enhancing financial security: Really what we’re talking about here is mapping out strategies to reduce tax burdens — meaning families can allocate more resources towards investments, trusts, and other financial vehicles that can generate income and support the long-term financial well-being of the family. 
  • Mitigating disputes and conflicts: Estate planning and wealth transfers can sometimes lead to conflicts and disputes among family members. By incorporating tax efficiency into the overall planning process, advisors can help minimize potential disagreements and disputes that may arise due to unequal tax burdens or inefficient transfer structures. 
  • Complying with legal and regulatory requirements: Tax laws and regulations are complex and subject to frequent changes. Advisors who prioritize tax efficiency stay updated with the latest tax laws and compliance requirements, ensuring that wealth transfer strategies are aligned with legal frameworks and minimize the risk of potential penalties or legal complications. 

7. Leverage Best-of-Breed Technology 

Having the right tools and technologies in place is a game changer for everyone; the firm, advisors, your existing clients, and especially for the next generation. 

When considering best-of-breed technologies to assist with wealth transfer conversations and engaging the next generation, there are a few key things to keep in mind: 

  1. Consider technologies that make it easy for the family to access and manage critical information, data, and documents. 
  1. Consider platforms that offer mobile experiences (applications). This next generation isn’t just digital-first, they are mobile-first. 
  1. Consider how the experience you deliver is seamlessly integrated and connected – every bit of interaction counts. 

In fact, a survey and study published by Deloitte found that 51% of financial advisors are thinking about leaving for an organization with better tech tools.  

The alarming reality is that 50% of your staff and advisors could hand in their resignation tomorrow all because they do not have access to the best technology, tools, and resources. 

Technology matters. 

To your Back Office. 

To your Advisors. 

To your clients. 

And you better believe it matters to the next generation. 

Investing in best-of-breed solutions isn’t just a “technology” investment — it’s a people, culture, and overall strategic business investment for today and for the future. 

Key Consideration: Leveraging a Digital Vault as a Major Piece to Connect the Dots  

Having everything centralized in one place is not only a huge time-saving benefit for your clients and their next-gen, but it’s also a massive value to your firm and other trusted professionals. 

A well-structured digital vault can serve as a central repository for all of the important documents and information that clients and their families need to access in the event of a change in circumstances, such as the passing of a family member, a liquidity event for the family, or the retirement of an advisor. 

We’re really seeing how a secure digital document vault serves as the single source of truth for all data, information, and documents for the family while providing a secure and efficient way to engage and connect with other family members, centers of influence, and trusted advisors (lawyers, planners, accountants, etc). 

Imagine the time and money families, your client’s family, can save during the estate settlement process with a structured and secure digital vault, where traditionally, locating critical paperwork and having access to information has been one of the most time-consuming and costly exercises, leading to massive financial burdens. 

Importantly, a digital vault goes well beyond a simple document dumping ground of a valuable tool for your clients and their family members. The right digital vault can transform back-office and administrative efficiencies with automation and straight-through processing, as well as help firms overcome books and records challenges to meet regulation, including Rule 17a4 compliance.  

Final words 

Much can be said here, but we’ll keep it simple: Start the conversation with your clients (likely the parents of the heirs to the wealth) right now and don’t overthink it.  

Are you engaging in conversations about the generational transfer of wealth with your firm, with your peers and colleagues, with partners and providers, and importantly, with your clients? 

If you’re not, and if you’re waiting on the sideline… then it’s too late. You need to be having these conversations in real time, all the time.  

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Learn how we’re successfully improving compliance, driving operational efficiencies, and helping front, middle, and back-office teams scale through secure document exchange and digital vault solutions. 

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