Implementing best practices during the Great Wealth Transfer

Cerulli Associates anticipates that $124 trillion in wealth will transfer through 2048. The company notes that as the number of wealth transfers accelerates, it is important for wealth managers, asset managers, and other industry participants to follow best practices with current relationships while shifting their service and product strategies to the future profile of the high-net-worth demographic. This is according to The Cerulli Report: U.S. High-Net-Worth and Ultra-High-Net-Worth Markets 2024.

Who is getting what?

So, who will receive what in this great transfer of wealth, and when will they receive it? Overall, in the next 25 years, Cerulli projects that there are multiple demographic groups that stand to benefit from record levels of wealth transfer, said Chayce Horton, senior analyst at Cerulli. Spouses and significant others will be in line to inherit over $50T in wealth in the next 25 years, and the vast majority of this amount will be going to women.

When that wealth eventually transfers down to next-gen households, Horton said, millennials are expected to inherit the most--$46T, though most of this transferring will take place in the 2030s and 2040s. “In the next 15 years, Gen X households will be the largest recipients of intergenerational wealth transfers, while ultimately receiving nearly $40T in wealth in the next 25 years,” he said.

Helping clients transfer their wealth

And what are some of the best practices that financial advisors and wealth managers can use to prepare their current clients to pass on their wealth? Advisors play many roles in preparing their clients for intergenerational wealth transitions, Horton said. “Advisors must foster effective communication and provide in-depth education and guidance when working with clients and their families as they assess the multitude of estate planning options,” he said. “Through this process, advisors play a key role in cultivating a network of multidisciplinary experts who can assess each client’s unique needs.”

In addition, Horton said, “advisors can play a key role in preparing potential recipients of wealth with communication, education, and by providing complimentary planning services that can increase the continuity in the advisory experience across generations.”

Building successful relationships

The survey also said that millennials will be inheriting the most of any generation over the course of the next 25 years ($46 trillion). And Gen X stands to inherit the greatest portion of assets in the next 10 years, totaling $14 trillion, compared to millennials’ $8 trillion.

When asked how managers and advisors should position themselves to build successful relationships with these groups, Horton said that “the most important thing to understand is that the vast majority of wealth transfers come when the current owner passes away, and the vast majority of wealth in those scenarios goes down to their children. As the children of parents passing away are generally in their 50s and 60s – these are going to be a large cohort of wealth recipients, and this has significant implications."

“This means that we need to rethink our definition of ‘next-gen’ to skew much older,” Horton pointed out. “And in rethinking these ideas, the industry needs to recognize that by the time a wealth transfer occurs, the recipient is likely to already have an advisory relationship.”

“With this in mind,” Horton added, “it’s not necessarily about serving one generation or another –but for the industry to think more concertedly about serving the needs of adults in their ‘sandwich’ years (40s-50s), when they are increasingly facing responsibilities for their parents while simultaneously retaining responsibility for their children. Advisors that can provide value to those in this stage will see the most benefit from the tailwinds of the great wealth transfer.”

The survey also pointed out that developing relationships with clients’ spouses or children is a top long-term growth strategy among high net worth practices, as the prospect of wealth moving from primary clients to spouses and children becomes ever more urgent. Conducting family meetings and maintaining a regular cadence of communication amongst family members is a key best practice, according to 89% of firms that were surveyed by Cerulli in 2024.

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