Three Key Areas for Advisers to Pay Attention to with the Great Wealth Transfer

October 2021 | ESG

Over the next forty years, approximately $30 trillion of wealth is estimated to be passed from baby boomers to Generation X and millennials in North America alone.[1] This shift in capital is being dubbed the “great wealth transfer”. For financial advisers, the transfer of wealth from baby boomers to their children over the next two decades is a bit like climate change: the consequences may eventually be huge, but it’s easy to ignore the issue in the short-term.[2]

This week’s blog shares three key areas for advisers to pay attention to with the great wealth transfer:

  1. Impact Investing: In studies conducted on age and impact investing, well over half the millennials have reported that they want their investments to align with their values.[3] Millennials are known to be values-driven in their approach to investments and their careers and if they don’t have an adviser knowledgeable in this area, they may be looking for a new one. Sixty-six percent of millennials will fire their parent’s financial adviser after they receive their inheritance.[4] Asking current clients and engaging with their children now is critical to retaining them on a long-term basis.
  2. Fees: Fees can be a make-or-break decision for many clients, especially younger clients who may be shopping around for a new adviser. Investors who don’t want to pay the traditional 1% of assets for financial advice have an increasing number of alternatives, according to a Wall Street Journal article. With the great wealth transfer, it is important to be cognizant of the younger generation that is embracing newer options—including advisers who charge flat annual or monthly fees and robo advisers that manage portfolios with computer algorithms.[5]
  3. Digital Experience: NextGen investors want interactions – they are coming of age in the era of social media and connectivity. They conduct business online and share content. Advisers should be paying attention to their technology capabilities to provide services the way millennials are accustomed to and may be looking for in their next adviser.

Earlier this week, we shared a new perspective on this topic. To read more about the great wealth transfer, click here.






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