As trillions of dollars flow to heirs over the coming decades, managers and financial advisors must enact best practices to ensure the assets in their practices won’t shift.
A new report by Cerulli Associates underscores the vitality in tightening product strategies and proven techniques to appeal to future high-net-worth demographics. Cerulli projects that through 2048, wealth transfers will total $124 trillion with $105 trillion expected to flow to heirs while $18 trillion will go to charity.
About 81% of all transfers will come from Baby Boomers and older generations, who will end up moving close to $100 trillion. Over 50% of the overall total volume of transfers, expected to be $62 trillion, will come from high-net-worth and ultra-high-net-worth investors, who currently account for 2% of all households.
Intra-generational transfers are also expected to account for trillions of dollars, Cerulli projects. According to the findings, $54 trillion will be transferred to spouses before eventually moving on to heirs and charities, with nearly $40 trillion going to widowed women in the Boomer generation and older age cohorts.
While Millennials are anticipated to receive most of the wealth transfer within the next 25 years, Gen Xers are paced to inherit the largest portion of assets in the coming decade, at $14 trillion compared to $8 trillion for Millennials.
“Eventually, most of the wealth owned by older generations in the U.S. will be either donated or passed down to Gen X or Millennial heirs. With $85 trillion to be passed down to these generations collectively, providers that can establish relationships with, and adequately address the needs of, these younger investors will be well positioned for success,” says Chayce Horton, senior analyst at Cerulli.
While the Great Wealth Transfer provides several opportunities for advisors and wealth managers to build their practice, studies show that some are concerned over the impact it could have to businesses. An October report from the Natixis Center for Investor Insights found that 41% of U.S. advisors believe the transfer presents an existential threat to their business.
To combat the threat, the survey found advisors are looking to build relationships with clients and their family members, improve their efficiency and service offerings, and find ways to be more dedicated to prospecting for new clients.
Cerulli’s research identified that developing relationships with clients’ spouses and/or children is a leading long-term growth strategy among high-net-worth practices. Notably, organizing family meetings and maintaining communication with family members is a key best practice, according to 89% of firms surveyed by Cerulli in 2024.
“Ultimately, there are notable differences in service and product preferences among women and next-generation clients compared to current client demographics, and as wealth moves, these differences are likely to shift market share in favor of firms that are best prepared to meet the needs of those recipients,” said Horton.
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