$30T in Inheritance Moving to Millennials: How to Prepare Your Business for This Great Wealth Transfer

Published on

June 3, 2021

The largest intergenerational wealth transfer in history will pass down over $30 trillion in inheritance across the next few decades. Here’s how you can prepare your business for your future millennial clients.

The largest intergenerational wealth transfer in history will pass down over $30 trillion in inheritance from baby boomers to millennials and Generation X across the next few decades. Millennial earning power will increase by almost 75% across the next few years. 


Whether you’re prepared for this generational wealth transfer or not, your 57 to 75-year-old baby boomer clients are or will be passing on their inheritance to these younger generations. And it’s estimated that 66% to 95% of baby boomer children currently don’t intend on staying with their parent’s advisor. 


For many advisors, this could mean that you can face the reality of losing a good majority of the clients you have today. As an advisor, this is the last thing you want. All the planning you’ve done with your baby boomer clients can disappear as soon as the money passes on to a new generation. Despite the risk, studies find that over 70% of advisors have never met with their current clients’ children to establish a relationship. 


It’s easy to avoid preparing for this wealth transfer because it seems so far off. Yet, the long-term consequences on your business are going to depend on how you prepare at this moment. Taking the time to prepare now could mean the difference between a risk and an opportunity for your business. 


To help get your business ready for the “Great Wealth Transfer,” we’ve outlined three strategies you can start to put in place today. These strategies include building a relationship with your client’s children, scaling your services, and going digital. While these won’t all be easy, taking the time now to serve your current clients better and prepare for your future clients will pay off in the long run. 

Build a relationship with the children of your current clients

For most advisors, millennial clients are not the money makers. They have less wealth than their parents and very different expectations of what services they want from a financial advisor. The “Great Wealth Transfer” is going to flip the script on that. Analysts project that by 2030, millennials will have more than five times the wealth they have today. 


These soon-to-be beneficiaries can be an area of opportunity for your business. The children of your current clients could become your future clients if you put in the time now to build their trust and prepare your business for their needs.


Even though this generation might not be in a position yet to afford your top-of-the-line services or become your best clients, taking the time to establish those relationships now will mean that you are their advisor when they can afford it. 

Start the conversation with your current clients

So how do you establish relationships with your client’s children? Like any referral, you have to start with your current clients. After all, you are already providing the level of value your existing clients are looking for. From there, a referral conversation, even one involving their children, can be an excellent place to start.


And in the case of your wealthier clients, chances are they are already engaged in their children’s financial lives, offering advice or support. This means you both share a vested interest in helping your client’s children prepare not only for their future inheritance, but for money management in general. This opens up a window of opportunity for you to step in to be an additional support for your client’s children. 


According to RBC’s 2017 Wealth Transfer Report, most inheritors are unprepared, unsupported, and uninformed about the inheritance process. This can, unfortunately, result in the mismanagement of most of the money passed down the family line. Both you and your clients should want to align on making sure their hard-earned money is best serving their future generations. 


Having a conversation with your clients about their children and what’s going on in the family can be a way for you to pick up exactly where their children stand and where your opportunity areas are.


If they talk about specific stages of life their children are in, such as getting married or starting their own business, make a note of this. In future conversations with their children, you can use this information to provide greater value for wherever they are in life right now.


You can also begin the conversation on how they plan on passing their legacy on. Building a plan today for how they want to manage any significant life events or future health issues can help reduce any confusion, concerns, or risks if or when those life events come up. Not only that, but this can be an opener for starting the conversation — and building a long-term relationship — with your client’s millennial or Generation X children. 

How to introduce yourself to your client’s children

Now that you’ve started the conversation with your current clients, the next step is to try to involve yourself in the financial lives of your client’s children. Given that many might be of the same age as you, ideally you are already ahead of the game in knowing how to relate and what issues they might be facing. 


Here are some easy-win ways you can start to build relationships with the children of your current clients:

  • Invite them to your next annual review meeting or portfolio review with your client, with your client’s approval. Then, follow up with an invitation to review their portfolio.
  • Schedule a one-on-one coffee with your client’s children to introduce yourself and start learning about their biggest financial questions. Ideally, you already know a bit about them from your current client and your own experience and can come prepared with valuable financial advice that positions you as the trusted family advisor. 
  • Encourage your current client to hold a family meeting to discuss future financial plans where you can sit in as a guide. 
  • Add them to any blog or newsletter correspondence that you send out so they can start to build familiarity with your name and what you offer.
  • Invite them to any events you are hosting or attending.
  • Create a social media account, such as LinkedIn, Instagram, or Facebook, or use one you currently have and invite your client’s children to connect with you. By sharing valuable content with them on platforms they most frequent, you can start to build trust, familiarity, and value. 


Start to prove the value you can provide in their life today. This way, when the time comes to decide their parent’s finances, you are not an unknown advisor to whom they have no ties or connections.

Scale your services 

As we’ve mentioned, your client’s children might not be in a position to afford your current services. Given the transfer of wealth, it’s essential to open the doors in meaningful ways for these potential clients regardless of their current financial circumstances. 


Although this can be a risk because it might not pan out in the future, it can be an even bigger risk not to attempt to build some inroads for millennial clients who might be major financial decision-makers down the road. 

Offer a financial plan that meets their current needs

Start the conversation with these potential future clients by offering them a financial plan or scalable options that address their current long-term goals. For example, this could cover planning for retirement, marriage, entrepreneurship or business management, or major purchases such as a car or home. 


Start to connect these conversations with those about how they plan on spending any inherited assets they might receive down the road. These conversations can pave the way for retaining your firm’s current assets as well as educating future inheritors on saving and planning for long-term goals. 


As these children start to build and inherit their wealth, you have laid the groundwork for positioning yourself as a valued resource. Now your relationship with this client, and their assets, can continue to grow and expand. 

Offer ESG investing

95% of millennials reported interest in sustainable investing. 84% indicated an interest in products that would allow them to invest with those values in mind. As part of your efforts to prepare for this generational wealth transfer, offering services such as ESG investing can be an advantage for advisors in preparing for the needs of your future millennial clients. 

 

However, it’s not just the children of your current clients who will appreciate the addition of ESG investing as part of their portfolio. 85% of the general population has an interest in sustainable investing. 84% expressed an interest in products that align their investments with the Causes they care most about. 

 

While we like to talk a lot about millennials and ESG, it’s actually baby boomers and Generation X who are the current drivers of ESG investing. This is not just a future strategy for future clients but a current strategy for clients now. 

Go digital

73% of U.S. millennials and Gen Z communicate digitally with other people more than they do in person, and 70% can imagine a future where 100% of purchases are online. These generations grew up with the internet. Their mentality is that there is an app to solve every problem, and managing their finances won’t be any different. Millennials don’t just prefer the online or digital experience — they expect it.

 

While the financial services industry has not always kept pace with the digital landscape, digital integration will become more of an expectation as millennial investors inherit and earn more wealth. As an advisor, this means your client experience is going to become synonymous with your digital experience. 

 

This does not mean that you need to drop everything and go 100% digital. But it does mean that you need to begin thinking about what digital solutions might make sense for your business. 

 

Consider technology that: 

  • Makes things easier for your clients
  • Gives them better access to you and your solutions, and 
  • Provides a unique experience that stands out from your competitors

 

Providing an experience like OpenInvest’s Portfolio Diagnosis, for example, can allow you to share intuitive, client-friendly, and digital impact reporting on your client’s current holdings. With a few clicks of a button, you can provide detailed, engaging, and automatic metrics that reflect the true impact of their investments. This is the kind of digital, automated, and easy experience most clients, not just millennials, can benefit from with their finances. 

 

Building in this kind of functionality and digital accessibility today won’t just benefit your millennial clients. You can start to build in tech capabilities that benefit your current baby boomer and Generation X clients, in addition to preparing for younger generations. 

 

Image source: Pew Research Center


While it might seem like these tech-savvy and automation-loving millennials would be gravitating in large numbers to robo-advisors, this is largely not the case. At the end of the day, your potential millennial clients want to have a relationship with their financial advisor. But, the way they want to interact with you might look a little bit different than how you might interact with your current clients. 


Instead of outdated systems, paper trails, and lengthy processes, they want better access to you and their finances at their fingertips. Getting started on building this kind of digital footprint can be crucial as you prepare for this generational wealth transfer. 

The needs of your future clients are not all that different from the needs of your current clients

For many advisors, the challenge of preparing for the “Great Wealth Transfer” is that the needs of your baby boomer and potential millennial clients might look and feel very different. Yet, both your current and future clients can benefit from the steps you take to put in place these strategies. By finding a balance of managing your current workload with preparing for your future workload, you can set yourself up for success with serving all your clients, both current and future. 


To learn more about how you can engage your current and future clients with values-based investing, sign up for a demo today or chat with our team at advisorservices@openinvest.com.


Investment in securities involves the risk of loss. Past performance is no guarantee of future returns. One cannot invest directly in an Index. Any opinions, estimates and forecasts offered in this document constitute judgment as of the date of the materials and are subject to change without notice, as are statements of financial market trends, which are based on current market conditions. We believe the information contained in this document to be reliable but do not warrant its accuracy or completeness. This material is not intended as an offer or solicitation for the purchase or sale of any financial instrument. The views and strategies described may not be suitable for all investors. This material has been prepared for informational purposes only and it is not intended to provide and should not be relied on for investment, accounting, legal or tax advice. OpenInvest may not have verified (and disclaims any obligation to verify) the accuracy or completeness of any information herein that has been provided or obtained by third parties.

Want articles and insights straight to your inbox?
Sign up for our newsletter below.