3 Things Every Financial Advisor Must Consider Preparing For The Great Wealth Transfer

Are firms prepared for the greatest transfer of wealth in history? Time will certainly tell...

The impending intergenerational transfer of wealth—also known as?The Great Wealth Transfer—where an?estimated $68 trillion?in wealth will move to younger generations, is going to massively shake up the entire financial services industry.

This movement of wealth across generations will undoubtedly hit institutions, advisory firms, and advisors like a?freight train?if they remain unprepared or so choose to ignore it.

Perhaps the most significant factor impacting firms is the variety of reports that state?45% to 80% of these heirs will switch financial advisors.

Experts have predicted tech-savvy generations would completely drop traditional financial advisors and gravitate toward robo-advisory offerings, but that has yet to be the case. It appears they still appreciate and value human interaction from trusted financial advisors.

What we do know is that younger generations expect minimal friction and want purely digital communication during required courses of action (and interaction) including the?client onboarding process, reviewing portfolio performance, and all aspects of client reporting, including?receiving digital statements.

For Financial Advisory firms and RIAs, Broker-Dealers, Family Offices, Credit Unions, Banks, you name it, it simply means this; digital capabilities are no longer a “nice-to-have”—they are emerging as a central value proposition for the new generation of active investors.

Here are 3 things every financial advisor must consider preparing for The Great Wealth Transfer...

1) Implement a Robust Digital Strategy

The cloud, AI, cyber-security, machine learning, and blockchain are changing the way businesses operate today. Technology is?improving the efficiencies of labor-intensive paper-based processes. Utilizing the cloud allows for the?secure transfer of documents, and AI improves search and filing functions allowing advisors and clients to communicate and collaborate from anywhere in the world.

2) Make Digital Literacy the Core of Your Business

Organizations must invest in their workforce to help them become digitally literate. A program dedicated to creating a staff of digitally literate employees will be a critical competitive advantage to serve a digitally literate client base.

A few of the topics employees should be well-versed in include big data and analytics, machine learning, automating business processes, blockchain, the Internet of Things, and the appropriate role of social media in client communications. The focus needs to be practical and how to use these tools to attract new clients while retaining existing ones.?

3) Deepen Relationships With Spouses and Family Members to Transform Heirs Into Clients

To capture your share of The Great Wealth Transfer, you need to get to know your clients extended families, especially those that stand to inherit your client’s wealth.

As mentioned earlier, the stark reality at play here is that a large percentage of the heirs in the?Great Wealth Transfer?will change firms and move their money away from their parents’ financial advisor(s). Even after knowing that, it is surprising that according to various reports only ~35% of advisors have met their client’s children, though over half of clients would be willing to make the introduction.

There are two familial aspects to focus on: meeting the spouse and family and understanding the family dynamics.

Look for opportunities to deepen relationships and establish trust. Look to provide value as you work to understand everyone’s needs, and you’ll position yourself to manage a family’s assets across generations.

If you don’t have strong relationships with your client’s extended family, there’s no better time to start. As the Chinese proverb says, “The best time to plant a tree was 20 years ago. The second best time is today.”

Overcoming the Impending Great Wealth Transfer

With respect to the impending challenge that advisors are faced with regarding the intergenerational transfer of wealth, having the right systems, tools, and technologies in place, can and will equip firms and advisors to confidently address these challenges head-on while remaining competitive, and importantly, winning the heart, mind, and wallet of households everywhere.?

A digital vault platform like FutureVault is fundamental to the collection, preservation, maintenance, and protection of critical information and documents — enabling advisors and the firms/institutions that support them to “keep their house in order” while ensuring that an exceptional client experience is delivered at every intersection of client interaction.?