Practice Management

A Roadmap for a new Landscape

Financial advisers today face what is perhaps their most significant challenge yet: helping clients move from inertia to activity in planning for the transfer of their wealth while ensuring asset continuity within the advisery practice when the wealth changes hands. Many families spend a great deal of time preparing the money for the family, but very little time preparing the family for the money. Advisers can help clients reconcile inertia by concentrating the wealth transfer conversation on the idea of legacy and value.

The Great Migration

Money is in motion. We are in a period of the greatest migration of wealth in US history. As Baby Boomers (1946–1964) enter retirement, they are transitioning from accumulation to divestment, and moving money across generations. This shift is a force reshaping the wealth management agenda and is expected to unfold over more than three decades. The numbers are staggering:

  • $12 trillion in assets has already changed hands in the form of inheritances from the Silent Generation (1928–1945) to Baby Boomers.1
  • Between 2011 and 2048, Baby Boomers are expected to transfer another $30 to $41 trillion to Generation X (1965–1980) and Millennials (1981–2000). 2,3
  • $59 trillion —with at least $39 trillion going to heirs —is the amount projected to change hands if we expand this time frame from 2007 to 2061. 4

For many financial advisers, this massive wave of intergenerational wealth transfer currently underway represents a business-building opportunity, but for others, it could imply an impending loss of assets, as many investors do not keep the same financial professional when navigating life changes.

While many investors plan to transfer their wealth, less than half actually have a plan in place.

Investor Concerns

It’s clear that family comes first when investors think about the objectives for the wealth they intend to pass on. Providing financial security, funding education and covering health care needs are all paramount. Some of the priorities are also directly correlated with investor worry. They perceive long-term care needs and large, unexpected expenses as the top threats to the wealth they hope to leave.

The aspirational intentions for the wealth investors plan to pass on represent hope, a sense of accomplishment, pride, contentment, joy and love. But the wealth preservation concerns reflect regret, anxiety, fear, a sense of failure and humility.

These illustrate the emotional side of wealth transfer planning and are indicative of what kind of legacy a client wants to leave. Ask your client what the concept of legacy means to them. Coach clients through astructured process designed to meet and realise their goals. Understanding the legacy they want to leave will help achieve a sustainable impact.

Core Values

Understanding genuine client goals and objectives and aligning your services to meet them are critical to adapting to the demographic shift. Open communication, a sense ofcontrol and transparency all matter and are essential to ensuring that effectivestewardship of a client's wealth legacy meets with long-term success. 

The successful advisory practice:

  • Sees the client as not just one person or a couple, but as a multigenerational entity.
  • Is willing to adjust the practice model as well as hone skills and add the resources necessary to support a multigenerational client base. 

Adapting and innovating will prove to be your best asset and will differentiate you in the eyes of your clients —both those you have today and those of the next generation. 

Regular discussions about money maters among families

What Can We Do Better?

During the first quarter of 2015, State Street Global Advisors conducted surveys and interviews with 400 financial advisers, 560 individual investors and a range of industry experts to explore generational wealth transfer planning and uncover “what are we not doing right yet?” and consider ways to adapt.

What we learned is that advisers have an instrumental role to play in multigenerational wealth management. But some important conversations are simply not taking place, or when they are, confusion regarding key measures often remains.

As an industry, it seems we have done a good job of focusing on prudent financial wealth management, but have been less diligent when it comes to helping investors be more comfortable talking openly about wealth.

The steps to overcoming wealth transfer planning inertia begin with you playing a supporting role as the facilitator for families, while also maintaining a strong level of sensitivity around the subject. Having a clear understanding of client objectives and ensuring your services align with those goals are critical when it comes to working effectively amidst the demographic shift.

Generational Insights

You may be familiar with your current clients’ preferred way of doing things, but what about those of prospective clients? Silent Generation and Baby Boomer investors might have been more predictable: with age and experience come increased investment sophistication. But with Generation X and Millennials, there are some new variables to consider. These investors have a more collaborative planning style, expect real-time information delivery, and are Commented [BL1]: Image to be supplied moving toward a holistic, goals-based approach to wealth management.

Essentially, to attract and service specific client segments, your practice model needs to be optimised to help support a more diverse platform that can resonate with multiple generations and appropriately address investor needs.

Managing the Transition

Offering the right solutions to the right clients at the right time is critical. In order to succeed in the context of the demographic shift, a focus on wealth transfer strategies has become a priority area for advisers who are also increasing the number of at-retirement products they offer and implementing personalised, goals-basedwealth management.

A focus on multigenerational wealth transfer strategies, or a focus on at-retirement products and solutions, are two business tactics that squarely address the forces shaping our agenda: an aging client base and a transition of assets. Personalised, goals-based wealth investment solutions speak to the mandate that we put the clients first. Modifying investors’ behaviour from areactive to a more proactive wealth management and planning model is critical. Ifan investor is being proactive, it gives them far more control and certainty about the roadahead.

Overcoming Avoidance Behaviour

Many families spend a great deal of time preparing the money for the family, but very littletime preparing the family for the money. Advisers need to help their clients take more deliberate steps early on in their overall wealth management plan. More than a third (37%) are waiting until they reach a certain age before implementing a plan. This trigger —or when there is a death or healthissue —isoften themoment when they become ready to involve their financial adviser in the process. Unfortunately, at this stage, it often can be too late for meaningful action.

Changing behaviour is not easy. As these conversations take place, keep in mind that there is a distinct difference between intent and action. It’s about bridging the gap between aspiration and execution, but it doesn’t have to require a life event to take place. It requires a deep and meaningful conversation about it.

Only 4% of families have regular meetings to discuss money matters, while 45% of families say wealth is never openly discussed.


1“The MetLife Study of Inheritance and Wealth Transfer to Baby Boomers,” Boston College Centerfor Retirement Research, December 2010.

2 “The ‘Greater’ Wealth Transfer: Capitalizing on the Intergenerational Shift in Wealth,” Accenture, 2012.

3 “Why the $41 Trillion Wealth Transfer Estimate is Still Valid,” Planned Giving Design Center, May 18, 2011.

4 “A Golden Age of Philanthropy Still Beckons: National Wealth Transfer and Potential for Philanthropy Technical Report: Boston College Center on Wealth and Philanthropy, May 28, 2014.