Log In

Understanding the Opportunities Amidst the Generational Wealth Transfer

BY team practifi

As the industry is well aware, the baby boomer generation is retiring, setting the scene for major transitions. Over the next two decades, wealth owners and large-scale investors will continue to leave their assets in the hands of millennial and Gen Z heirs. 

As for what this means for advisors and wealth managers, the first instinct may be to worry. Younger clients come with new perspectives and opinions that can shake up long-time relationships with financial advisory firms. And it’s true; there are risks for advisory firms that fail to adapt — we’ve covered those here

On the other hand, there are also opportunities associated with this changing of the guard. Wealth management firms that plan effectively, form intelligent strategies and build out their technology resources can improve their position. They’ll be better able to reach out to young investors who may feel alienated by the wealth management firms their families have relied on for decades. 

Financial advisory firms can rise to this opportunity if they understand the types of offerings today’s clients are looking for. Remember that the generational wealth transfer has already begun, so the time to adopt these practices is now. 

Opportunities amid the generational wealth transfer

As millennial and Gen Z individuals step into greater investment roles, there are several promising avenues for financial advisory firms to explore. Instead of solely maintaining existing client relationships, forward-thinking firms can leverage this transition to expand their reach and enhance their business. 

Young investors may be ready to play the field

Financial advisors are concerned about losing business when their clients’ heirs take over. This naturally means younger wealth owners will be ready and willing to look for other firms to make them a better offer. In light of this, some savvy marketing and promotion may even be able to convince these investors to change advisors. 

The meetings and informational sessions used to woo these potential clients should be updated to reflect their generation’s preferences. While a sit-down with a wealth manager may have once involved a cocktail hour or a golf trip, presentations today tend to be quicker and more to the point. They may also be outside of normal business hours to fit into investors’ busy schedules. Video conferences can be a useful tool here, letting advisors pitch services in quick windows of time, without having to arrange an in-person sit-down. 

Adding to the potential opportunity is the fact that wealth owners may split their assets among several heirs. While one or more inheritors may opt to stick with the same financial advisory firm that has handled their family’s investments for years, others may be willing to switch — ambitious wealth managers can compete for these heirs’ business. 

Self-service tools are a good thing for financial advisors 

Financial advisors were initially hesitant when technology came to the field, fearing some of their duties would be taken on by automated robo-advisors. However, while the financial advisory field is more digitally enabled than ever, live advisors have not been replaced by algorithms. When dealing with large amounts of wealth and assets, investors still tend to want an expert’s sign-off on major portfolio decisions. 

Firms that offer client-facing technology tools can get the best of both worlds. They give their clients the ability to be more self-guided and have a direct say in how they invest their money, while still keeping up a working relationship with those individuals. In these cases, investors are seeking confirmation rather than direction, but they’re still turning to experts. 

Wealth managers can adapt to serve this type of client, who will take less of an advisor’s time but may hesitate to pay the conventional percentage fee on investments. A fee-for-service or hourly consulting model may be the perfect way to capitalize on hybrid investors who are taking on some of the research themselves and then coming to their advisors for a final sign-off. 

Rich, useful customer data is now widely available 

Hyper-personalization is a buzzword across industries, and with good reason. When companies can target their customers directly, they stand a better chance of reaching those clients, especially when operating in a high-stakes field like financial advice. What fuels this level of personalization? It runs on data about preferences and interests. The most forward-thinking wealth management firms will find ways to collect and leverage customer data. 

Building an accurate and up-to-date client profile is a critical step in offering hyper-personalization. The data needed to create these records can come from multiple sources. Active financial advisors can be constantly building knowledge and relationships through meetings and conversations with account holders’ heirs. There is also plenty of publicly available data on the web in the form of social posts — millennial and Gen Z clients’ social media profiles offer a glimpse into their preferences, values and priorities. 

By using all this content, financial advisory firms with centralized customer relationship management (CRM) systems can build a new generation of client records. Today’s tech tools should go beyond conventional CRM data storage, providing robust, real-time client records and integrating smoothly with modern applications to help firms deliver a personalized and highly responsive client experience. 

It’s important that data is stored digitally and is accessible by all relevant staff. Too often, financial advisors simply commit details about their clients to memory — this harms the firm in the long term when new advisors take over an account and find themselves without key details about investors or their heirs. 

With that new approach to information usage in place, an advisory firm can be confident in its near- and long-term future. While less-prepared organizations may be disrupted by a new generation of clients coming to prominence, or by retirements in their own ranks, organizations with detailed, easily available data won’t face the same level of problems. 

Becoming a forward-looking financial advisory firm for a new generation

Organizations that seize the available opportunities will quickly find that a generational wealth transfer is an exciting time to make moves in the wealth management space. It’s possible to win over millennial and Gen Z investors with more adaptive strategies and supporting technology. 

Firms that become complacent run the risk of losing out on the next generation of wealth owners. A lack of client-facing technology and modern communication tools could make these firms seem inaccessible. Insufficient internal technology could leave them unable to share vital data and personalize their services. This means a technical upgrade is a must for forward-looking firms. 

The generational wealth transfer is underway, and it will play out over two decades, per Cerulli research. During this time, a new crop of top financial advisory firms will rise, and your organization can be among them, provided it has the correct technology backbone in place. 

Practifi can provide that necessary technology, helping your organization transition into being a truly modern financial advisory firm. You can accomplish this transformation by starting with powerful CRM technology built for the wealth management space. 

See Us In Action!

Join us for an exlcusive look into Practifi’s capabilities and features during our product demo.

Register now
Browse Categories

Check out our new eBook: Why Unifying Data Is The Key To A Great Client Experience

Get My Copy