The latest research from Escalent’s Cogent Syndicated analyzes how generations will grasp one of the greatest wealth transfers in history, where expected inheritors will receive $90 trillion in assets over the next two decades.
The “Trajectory of Intergenerational Wealth Transfer” report finds that in the next decade, 28% of affluent investors expect to inherit wealth. Forty-four percent of those inheritors will be Gen Xers, 25% Millennials, and 22% will be those in early retirement, or second-wave Baby Boomers.
Escalent’s survey opens the question of how generations will use their future wealth. Most Millennials surveyed say they would invest their inherited assets, as 70% expressed interests in capitalizing on their future wealth funds. On the other hand, Gen Xers and early retiree Boomers are less likely to invest their funds—with only 46% and 48% conveying interests.
When considering wealth transfer conversations, financial advisors will have to review how generations prefer to speak to professionals or receive information. For example, Escalent’s survey reports that 45% of early retiree Boomers prefer to communicate with a financial advisor through email, whereas 41% of Gen Xers and 25% of Millennials say the same.
Younger generations prefer to speak to a representative on digital platforms, and much more so than their older counterparts. Millennials would rather consult an advisor through a website (24%), mobile app (18%), or social media (13%), compared to Gen Xers (21%, 5%, 4%, respectively) and early retiree Boomers (10%, 3%, 2%, respectively).
“Millennials’ aptitude for and interest in technology is clear. While they are just as likely as older generations to leverage financial advisors and other types of advice, Millennials are significantly less likely to use emails. Instead, they tend to favor digital communication platforms like mobile apps and social media,” said Steven Ethridge, senior director at Cogent Syndicated. “In contrast, the most effective methods for reaching Gen Xers and early retiree Boomers are emails, websites and phone calls.”
“As these generations come into their inheritance, it’s crucial for financial service providers and wealth managers to steer them toward optimal financial decision-making,” continued Ethridge. “Millennials recognize the importance of saving and investing but lean towards high-tech platforms, while older generations prefer in-person interactions and email communication. To capture these inheritance dollars, firms must employ targeted messaging and innovative strategies to connect with affluent investors.”
Recent study findings have probed how different generations discuss wealth, legacies, and inheritances. A February report by Edward Jones and NEXT360 Partners found that 35% of respondents in a survey do not plan on discussing wealth transfers with their families, and would instead rather have a conversation about retirement and personal savings.
Yet, another report later that month by the firm, and this time with Morning Consult, reported that 89% of 200 financial advisors say their clients have a wealth transfer prepared, with 65% adding that clients are bringing children or parents to discuss future financial plans.
SEE ALSO:
- More Families Discussing Wealth Transfers
- More Americans Avoid Wealth Transfer Conversations
- Higher Rates of Wealth Managers, Advisors, Clients, Using Model Portfolios
Amanda Umpierrez is the Managing Editor of 401(k) Specialist magazine. She is a financial services reporter with over six years of experience and a passion for telling stories and reporting news. Amanda received her degree in journalism and government and politics at St. John’s University. She is originally from Queens, New York, but now resides in Denver, Colorado with her partner. In her free time, Amanda enjoys running, cooking, and watching the latest drama show.
