- Baby boomers will live longer than previous generations, so health-care costs and living expenses may eat into potential inheritances passed down to millennials.
- Young investors typically fire their parents’ financial advisors after inheriting their wealth.
- Most advisors haven’t devised a plan for courting clients’ children, or younger investors in general.
Much has been made of the massive generational wealth transfer, from aging baby boomers to their millennial and Gen Z children, that’s coming over the next several decades. But in some quarters this $30 trillion exchange is being met with a lot of hand wringing. As big as the transfer is, there’s an equally well-known statistic that usually accompanies any discussion of intergenerational wealth: Two-thirds of heirs fire their parents’ financial advisors shortly after they receive an inheritance, according to an InvestmentNews survey. Why?
“Many of those inheriting children — they’re not children anymore — they already have established relationships with financial advisors on their own and they’re quite comfortable with those relationships,” said Kendra Thompson, managing director with Accenture’s Wealth Management practice. When it comes to inherited windfalls, it “should not be taken for granted by any advisor that they’ll be able to keep that money,” she added.
Forward-looking practices are retooling their businesses, recognizing that tomorrow’s clients have different priorities and preferences than their parents did. And they’re addressing everything from their hiring decisions to their fee structures and their technology use.