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27 January 2022

The Wealth Transfer Opportunity

Are you ready for the estimated $70 trillion transfer from baby boomers? Around 20,000 baby boomers are retiring each day, and this staggering number is the latest estimate of the assets that will be handed down through inheritance to their heirs over the next 20 years.


This transfer of intergenerational wealth has the potential to redefine how advisors think about their business. The demographic born between 1946 and 1964 has been a “gold mine for financial advisors as baby boomers were the largest and wealthiest generation in US history,” according to the latest whitepaper from the SS&C Black Diamond team, How to Manage Intergenerational Wealth Transfer: Three critical strategies for advisors.


Of course, there comes a challenge with every opportunity, and in this case, the concentration of wealth in the baby boomer demographic carries real business risk for advisors. The number one cause of client attrition for high net worth advisory practices is client death and beneficiaries moving assets to other providers. Nearly 90% of heirs fire their parents’ advisors and go elsewhere – a truly frightening statistic.


So, what can advisory firms do to not only navigate the upcoming transfer but also capitalize on the opportunities it creates? According to the whitepaper, advisors can take three actionable steps to prep their business and successfully manage this generational opportunity.


The first seems obvious and intuitive. However, many firms don’t take the time to get to know the next generation of their current clients or are just unsure of an appropriate way to go about it. For many experienced advisors, it all starts with the onboarding process and embedding specific details of clients’ children within their CRM. From there, to be central to that next-generation relationship, advisors can identify planning opportunities for their client’s children, such as setting up savings plans for young children or offering benefit reviews and complimentary financial planning sessions for adult children.


Secondly, advisors can make themselves invaluable in their clients’ lives through their unique specialties and consistent communications that trickle down to the next generation. For example, many millennials are interested in aligning their values with their investments. By providing indispensable advice around ESG investing, an advisor can position themself as a go-to resource for that next generation.


Thirdly, firms must ensure they up their technology game. Future inheritors all want to have digital access to their service professionals. So, now is the time to make a strategic investment in a first-class digital client experience to ensure relevancy to the 90% of the asset base that is at risk of leaving upon wealth transfer. As part of this process, enhancing all aspects of the firm’s technology stack from portfolio management, accounting, and reporting to financial planning to a full-service client portal are the minimum steps needed to future-proof a practice.


According to the whitepaper:


“An advisor who wants to sustain the family relationship should be involved with the heirs from the beginning, showing the right balance of pragmatic planning and thoughtful consideration. Properly cultivated, heirs should feel that the transition is seamless and natural. Ultimately, they will decide to stay with your firm, not because of family loyalty or tradition but because you have demonstrated that you are, in fact, their best option.”


The good news is that with the Black Diamond® Wealth Platform as your technology partner, you have all of the components you need to modernize your business and position your firm to capture your share of that $70 trillion about to be on the move. To learn more, download the complete whitepaper or request a personalized Black Diamond demo today.