By providing financial education as a service to client families, advisors can convert generational wealth transfer from a risk into a growth opportunity
The great generational wealth transfer is upon us. It’s been estimated that around $72 trillion USD will be inherited by individuals over the next 20 years (plus an estimated $12 trillion USD that’s expected to transfer to nonprofit organizations). In many cases, this massive wave of inheritance will end up with the children and spouses of the wealthiest generation in the history of the world—the baby boomers.
For financial advisors and their firms, this generational wealth transfer is both a risk and an opportunity. History shows a significant amount of each advisor’s current AUM will be changing hands during this transfer, so the battle has already started for advisors to win the next generation of clients.
What We Know:
- 87% of heirs don’t stay with their parent’s financial advisor
- 50% of widows switch financial advisors within a year of their spouse’s death
- 90% of financial advisors have no relationship with their client’s children
What This Tells Us:
- Building strong intergenerational relationships is how advisors can preserve and grow their AUM during the generational wealth transfer
Proactively Developing Relationships with the Next Generation of Clients
It’s easy to leave a service provider if you don’t have a strong relationship with them or see the value they’re providing. Knowing this, it’s vital that financial advisors and their firms build meaningful connections with the entire family of their clients—and they must do it quickly. Every member of the family should know, trust and see the value their advisor plays in their financial success. Otherwise, it’s easy for heirs to take their inheritance and move on to another service provider. In fact, statistics indicate that they will do just that.
Offering Financial Education is an Opportunity to Build Full-family Relationships
An advisor who has an existing relationship with a client’s family has a tremendous advantage in this historic transfer of wealth. In many cases, clients want to know their hard-earned wealth will be taken care of by those who inherit it. They trust their advisors to help protect their savings, and develop elaborate estate plans and trusts specifically to maintain it for future generations.
One of the biggest risks to these well laid plans is that many heirs don’t have the same level of financial literacy as their parents or grandparents, which makes it difficult to make informed decisions and appreciate the important role a financial advisor plays in maintaining and growing wealth.
Financial Education Is Win-Win-Win for Advisors, Clients and Their Families
Clients worry about their families and want to help them enjoy the same success and financial security they’ve had. Helping your clients ensure that key members of their family have an adequate level of financial knowledge supports the goals of all parties (advisor, client and their beneficiaries). This financial knowledge includes a familiarity with and understanding of your client’s financial plan and estate plan, including all pertinent documents within it.
Supporting the financial literacy of your clients’ family members has several benefits:
- Advisors have an opportunity to build lasting relationships with multiple family members by serving as a trusted financial expert
- Family members get the financial knowledge and support needed to protect their inheritance and develop a plan to achieve their own financial goals
- Your clients get peace of mind
This education must be delivered in a way that’s accessible, engaging and effective. Workshops and events are one way to engage with clients and their families, but concise, informative video content will have a broader reach, greater buy-in and much bigger impact on younger age groups.
Fact: Millennials Have the Weakest Financial Literacy of Any Generation
If your clients are transferring their wealth to their millennial children and/or grandchildren, they may need to take extra steps to prepare their beneficiaries for success. The same could arguably be said for Gen Z or any younger person who will be receiving a large sum of money.
Our Knowledge Drip Videos feature engaging, informative, one-minute videos on personal finance. Expertly designed to introduce essential money management skills to your clients and their children in an approachable way, this content will spark multi-generational conversations about wealth management. We also offer custom video content packages that include strategic advising, copywriting, video editing and more.
Let’s Creative Financial Literacy Through Personalized Wealth Education Videos
At Baking Bread Media, we turn your knowledge and credibility into education-based programs that attract and retain multigenerational wealth management clients. Our fully managed video education programs make it easy and affordable—please contact us to learn more or get started. Our team is ready to help you share your expertise while maintaining or increasing your AUM during this incredibly important chapter in wealth management.
