Inheriting Heirs

Author: Scot Macfarland CFP®, Practice Management Consultant

Multi-generational wealth transfer is one of the most significant factors affecting clients and financial advisors in the coming decades. It is estimated that $84.4 trillion of wealth will be transferred to Gen X and millennial heirs and charities through 2045, according to Cerulli Associates. Most of this wealth will be transferred from Baby Boomers – about 63%-- but the Silent Generation still has about $15 trillion left to give. At the same time, Cerulli studies have found that more than 70% of heirs are likely to fire or change financial advisors after inheriting their parent’s wealth.

The great wealth transfer offers financial advisors the opportunity to future proof their practices, particularly those that are primarily focused on serving clients nearing or at retirement. Many heirs will switch financial advisors, rather than staying with their parents' advisors, because they have not had the opportunity to build trust with them. That's why it's critical for advisors to focus on building relationships with the next generation.

Let’s look at some ways advisors can engage and build trust with their clients' extended families and support groups.

Get to Know Clients’ Beneficiaries and Heirs

It is important for advisors to establish a relationship with a client’s heirs, so the groundwork of mutual trust has been laid before tragic events change the relationship. Advisors can invite clients to include their adult children or grandchildren in planning meetings to understand the family finances and to also explore their own financial planning needs. This gives them the opportunity to get to know the advisor and better understand his or her strategy and philosophy for managing money, which is a vital step in building trust and rapport with the next generation heirs

Some advisors also host more formal family meetings, assisting the family in building an intergenerational continuity plan. Establishing a formal plan for wealth transfer helps ensure a client’s values and legacy are preserved while providing for the financial needs of the next generation. A formal plan increases the comfort that the next generation has in the process that was put in place and can reduce abrupt changes in the strategy when the assets are ultimately transferred, like changes of professionals.

Educate Beneficiaries and Heirs on Planning Concepts and Unexpected Events

Concerns about inflation and a turbulent economy have more millennials turning to financial advisors for advice. One way to engage the next generation is to host family events designed to educate clients and their extended families or support groups about financial planning topics and timely concerns. Information can be tailored for different age groups and life stages so both the client and their heirs can benefit from the presentation.

These events – whether large group seminars or more intimate meetings with individual families – can help demonstrate the value an advisor brings to prepare families for unexpected events. By establishing themselves as a trusted advisor and building strong relationships with heirs, the advisor is more likely to be turned to by all members of the family when there are financial questions to be answered or during times of financial change. Establishing a plan as a part of this process also makes it less likely the clients' heirs will seek a new advisor relationship later. These events are also a great way for an advisor to win the business of the client’s adult children or grandchildren, which also increases the likelihood of retaining assets.

Tailor the Business for Future Generations

When targeting next generation business, advisors may need to re-evaluate their current business values, practices, and resources. Understanding the values and goals of the next generation and ensuring business practices align with them is critical.

For example, younger generations tend to prefer more collaboration and quicker response times than older generations. So, an advisor may want to re-examine if their process for creating a financial plan takes into account this desire for greater collaboration -- whether in person or online. They also need to look at communication channels. Traditional ways of keeping in touch with clients may need to be revised or enhanced to keep up with the expectations of younger generations who grew up in a digital world.

Advisors may also need to consider the types of products offered. Younger generations tend to look beyond financial factors when making investment decisions, including considering investments aligned with their own values. So, advisors may need to offer access to more investment opportunities that consider environmental, social and governance (ESG) principles.

Advisors need to review business processes, communication channels and engagement models to ensure the way they interact with the younger generation resonates with them. Advisors may also consider bringing on an up-and-coming advisor into their practice who has more in common with the younger generation and may be more successful in engaging with these types of clients and prospects.

Review and Update Tools and Technology

Younger generations absorb and interact with financial information differently than older generations. Most younger clients want instant access to data about their investments and regular engagement with their advisor through text or video conferencing. Attracting and retaining the younger generation requires being more technologically savvy and providing these clients with tools to view and analyze their financial data, documents and critical information online. Advisors should consider incorporating tools like MyBlocks, MoneyGuidePro, Yodlee account aggregation, and CRM capabilities into their practice, along with providing access to a next generation client portal to clients. Practice management experts at the advisor’s broker-dealer firm can often assist with providing access and training for the latest tools and technology so an advisor is prepared to work with the next generation.

Grow with the Next Generation

Advisors who begin engaging now with the next generation will have the greatest opportunities to retain assets as their client base ages, while also expanding their practices as younger generations inherit and accumulate wealth. Advisors who build relationships with families and trusted partners, regularly review their tools to incorporate new and effective resources, and continually update their processes to grow with the needs of their clients are in an ideal position to serve many generations of clients.

Learn more about next generation planning by contacting Scot Macfarland CFP® at or 214-859-9728

To learn more about Momentum Independent Network, contact Wealth Management at or 833-4HILLTOP.

The paper/commentary was prepared by Momentum Independent Network (MIN). Momentum Independent Network, Inc. is a registered broker-dealer and registered investment advisor that does not provide tax or legal advice. MIN and Hilltop Securities are wholly owned subsidiaries of Hilltop Holdings, Inc. (NYSE: HTH) located at 717 N. Harwood St., Suite 3400, Dallas, TX 75201, (214) 859-1800, 833-4HILLTOP. Member FINRA/SIPC

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