The Great Wealth Transfer Is Coming. Are You Ready?

As baby boomers begin to retire, financial advisors need to start preparing for the intergenerational transfer of wealth. This is a huge opportunity for financial advisors, as it is estimated that over $30T will be transferred from baby boomers to their heirs over the next few decades.

There are a few things financial advisors need to do to prepare for this transfer of wealth. First, they need to educate themselves on the unique needs of different generations. Each generation has different financial goals and priorities, so it is important for financial advisors to understand these differences. Second, financial advisors need to develop relationships with both the older and younger generations. This will help them understand the family dynamics involved in wealth transfer and identify potential opportunities. Finally, financial advisors need to create comprehensive financial plans that account for the intergenerational transfer of wealth. Below are tangible steps advisors can take now to position themselves to successfully help families navigate this complex process.

Stronger Together: The Benefits of Teaming

Teaming is a collaborative approach that allows financial advisors to pool their resources and expertise. By working together, financial advisors can provide a more comprehensive range of services. By working with other financial professionals, advisors can develop well-rounded financial plans that better account for the unique needs of each client.

As intergenerational wealth transfer becomes more common, financial advisors who utilize teaming will be better equipped to meet the challenges and opportunities that come with it. In addition, teaming allows financial advisors to build relationships with multiple generations. This is essential to preparing for the intergenerational wealth transfer. By understanding the needs of both baby boomers and millennials, financial advisors can develop creative solutions that will benefit all parties involved.

One way financial advisors can implement a teaming strategy is by hiring an intern or an entry-level financial advisor as a partner. This may help an advisor reach a different group of prospective clients, who are more social media and tech savvy. These new partners can help alleviate the additional workload associated with trying to work with the children of current clients, who may not be "qualified prospects" in the traditional sense. This can also provide a sense of continuity when the lead financial advisor considers retirement or clients experience life events that result in wealth transfer to the next generation.

Addressing Financial Literacy

By providing financial literacy education to their clients and making these resources available to the children of their clients, advisors can help them to make informed decisions about how to manage their money. In addition, financial literacy education can help advisors to identify potential financial problems that may arise during the wealth transfer process. By being proactive about education relating to financial matters, financial advisors can help both their clients and their clients’ children to prepare for a successful intergenerational wealth transfer.

The key is to emphasize financial literacy and personal finance. Frame conversations around achieving goals as opposed to individual position returns. Here are a few topics to focus on:

• Finance 101: what is a stock, bond, mutual fund, ETF, etc.?
• How to manage a checking and savings account
• What is a credit score and how do I grow my credit score?
• I just got my first job. What is a 401k and what do I do with one?
• How can I afford to purchase my first home?
• How do I build a personal budget?

Digital Client Acquisition and Engagement

Millennials are increasingly turning to online sources to search for both financial advisors and financial advice. Think about what is generally the first thing that we do as consumers when looking for goods and services: we Google them. Why should we expect finding financial services and advice to be any different?

The importance of building a finely tuned digital presence has never been greater. Here are some of the tools you should have to set your practice up for success:

• Social media presence across multiple social networks.
• YouTube presence.
• Online advertising.
• Optimized website construction that also takes into account search engine optimization (SEO).

Relationship Building with Your Clients’ Children

Relationships are the cornerstone of any successful advisory practice. Maintaining a relationship with the children of clients, even if they're not qualified prospects, can help advisors over time. Using inexpensive tools like webinars, social media, online events or inviting them to meetings with their parents is an excellent way for advisors to start and maintain relationships with the next generation.

In addition, advisors can leverage technology tools like robo-advisors or model portfolios to build scale into portfolio management for smaller account sizes. Advisors can also look to become literate on topics relevant to a younger generation, such as cryptocurrency and digital assets, thematic investment strategies and ESG.

Prepare Now

The intergenerational transfer of wealth can be a complex process. When children or other beneficiaries inherit financial assets, they may not have a realistic understanding of what those assets are worth or how they can be used.

By incorporating teaming, addressing financial literacy, and using digital tools to acquire and engage prospects, you will be in a better place to develop and maintain relationships with the next generation of clients. Don’t wait. Financial advisors who are prepared for this new environment can play a vital role in helping families navigate the challenges of intergenerational wealth transfer.