How to manage the impending wealth transfer: A guide for advisors


Wednesday, February 21, 2018 | By Paul Polese

How to manage the impending wealth transfer: A guide for advisors

Will you be able to sustain your business beyond the lifetime of your oldest clients, after they leave their fortunes to their heirs? For investment advisors who built their businesses on the wealth of baby boomers, the impending transfer of an estimated $30 trillion – the largest intergenerational wealth transfer in history – poses a predicament. Significant assets could soon be walking out the door. According to an article in InvestmentNews, 66% of children fire their parents’ advisors upon receiving their inheritance.

While the impending wealth transfer presents a challenge, it also presents an opportunity for a firm to strengthen its foundation and value proposition to serve a new generation. Strategies for long-term asset retention should be a top priority for every RIA. If financial advisors connect with beneficiaries early, provide relevant advice, and position themselves appropriately, they can significantly increase the likelihood of managing assets for families across multiple generations. Retaining younger clients with a longer time horizon can, in turn, enhance a firm’s value for succession or acquisition planning.

The key to achieving this is getting to know the heirs personally and understanding what is important to them as individuals. In many cases, the children of baby boomers are not likely to follow in their parents’ footsteps. They may pursue different professions; have their own political beliefs, cultural touchstones, definitions of success, and very different ideas about money and wealth.

A critical difference to pay attention to is different generations ‘relationship with technology. The sons and daughters of boomers have grown up with the Internet and interactive technology. They are quite comfortable collecting information and conducting business online. In fact, many may prefer that to human interaction. Younger generations want to make their own decisions based on the information they gather. This has significant implications for how they will make decisions about their inherited wealth. Indeed, the emerging tech-savvy generation of wealth builders is a key driver behind the rise of automated investment management, or “robo-advice.”

Our new white paper, How to Manage the Impending Wealth Transfer, lays out three key strategies for advisors to improve their chances of winning over the heirs to the baby-boom fortune. It outlines the steps advisors can take to connect with members of the next generation, earn their confidence, cultivate relationships, and demonstrate real value. Advisory firms need to take a hard look at their use of technology to ensure it measures up to the standard to which the next generation has become accustomed. Firms that wish to retain the assets passed on from clients to their children must demonstrate they can provide seamless, on-demand digital client experiences on par with global technology leaders such as Google, Amazon, or Apple. They must adapt to their future clients’ preferred channels of interaction and give them 24/7 information access. They must be able to show that they are using the latest technology not merely to achieve efficiency and scale, but to create a uniquely satisfying and differentiating client experience.

The strategic use of technology can play a key role in helping advisors efficiently and effectively prepare for the transfer of wealth from boomers to their heirs. To see the essential components of an integrated, client-centric advisory platform, download our white paper.



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