Inheriting An Advisor, Along With Great Wealth

By Cyril Tuohy

InsuranceNewsNet

Millennials from families with a net worth between $25 million and $100 million aren’t only going to inherit tens of billions of dollars’ worth of wealth, they are also likely to "inherit" their parents’ advisors.

The Morgan Stanley Private Wealth Management/Campden Wealth “Next Generation” Survey of 87 ultrahigh-net-worth individuals under age 40 found that 49 percent of them are likely to continue working with their parents’ advisors. Also, 63 percent said that working with advisors is necessary to make sound financial decisions.

In many ways that makes sense. Family doctors who are familiar with medical issues facing the parents have a head start in treating the children.

Similarly, a seasoned financial advisor who is knowledgeable about a particular family's wealth — how it was built, maintained or lost — knows more about their wealth habits before the millennial client walks through the door.

Relying on financial advisors who served their parents may also be due to the fact that when it comes to stewardship of great wealth, millennials think along the same lines as Mom and Dad: 63 percent of respondents viewed themselves as stewards of their wealth compared with 46 percent of the previous generation.

Millennials, those born between 1980 and 2000, are about 80 million strong and are beginning to enter the workplace in big numbers. Many of them are tech savvy, but this survey found that many of them — the wealthy among them at least — are happy to conduct business the old-fashioned way, through a conversation.

The survey found that 82 percent of wealthy millennials want more in-person engagement with their financial advisors, 74 percent want to conduct more business over the phone and 68 percent want more email communication.

In addition, the survey found that only 15 percent want more social media interaction. Only 5 percent want more communication via Internet video or Skype, the survey found.

“A generation that stands to inherit considerable wealth tells us that the myth of the idle rich is just that — a myth,” Douglas J. Ketterer, head of strategy and client management for Morgan Stanley Wealth Management, said in a news release. “And, while they may use social media to connect in their personal lives, today’s next-gen wealthy say they prefer to manage their wealth in face-to-face meetings with an advisor.”

Millennials are also very risk averse, having been raised amid significant debt and having witnessed the destruction of wealth wrought by the financial crisis of 2008.

Only 11 percent of respondents said they are willing to undertake substantial risk in exchange for an equal amount of gain. That compares with 33 percent among inheritors ages 30 to 40 who stand to inherit significant wealth.

Cyril Tuohy is a writer based in Pennsylvania. He has covered the financial services industry for more than 15 years. Cyril may be reached at cyril.tuohy@innfeedback.com.

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Cyril Tuohy is a writer based in Pennsylvania. He has covered the financial services industry for more than 15 years. He can be reached at cyril.tuohy@innfeedback.com.