How to Win the “Great Wealth Transfer”: The Growing Demand for Next Gen Advisors

Over the next 25 years, an estimated $68 trillion¹ will pass from Baby Boomers to their heirs in what is often referred to as “the Great Wealth Transfer.” This massive financial shakeup will certainly impact the wealth management industry; how can today’s financial professionals position their firms to come out ahead as trillions of dollars change hands?

The key to positioning your firm to both retain current clients and attract new ones is by focusing on “Next Gen” advisors, a group uniquely positioned to understand the goals, pain points, and preferences of Next Gen investors who will soon control 57% of current investor assets². By welcoming Next Gen advisors into your practice, you can gain unique insight into how these new investors are thinking, including the problems they face and their financial goals. Next Gen advisors are fluent in the trends, preferences, and languages shared by Next Gen heirs, and thus are better positioned to effectively communicate with these clients and, ideally, increase client retention.

What’s more, by welcoming these Next Gen advisors into your practice, you open the door to new succession options to ensure the longevity of your business. Within the next 10 years, 37% of financial advisors, collectively controlling $10.4 trillion, or 40% of total industry assets, are expected to retire. Yet, 25% of advisors who are expected to transition their business within the next 10 years are unsure of their succession plan³. While it is never easy to turn over the proverbial keys to the castle, by recruiting Next Gen advisors now, current advisors will be able shape and mentor their potential successors in a way that is beneficial to their own independent business model.

Of course, in order to successfully reap what is sown and create a truly long-term plan for your practice, it is critical to not only attract Next Gen advisors, but retain them as well – a tall order in today’s competitive labor market. However, there are specific ways to increase Next Gen retention.

Foster a sense of belonging and purpose: Engaged employees are 87% less likely to leave their employer⁴. One way to do this when working with younger associates is taking the time to listen to their ambitions and creating a clear path to help them toward their goals. Plus, taking a more hands-on approach to development is an excellent way to help associates gain a clear sense of the firm’s purpose and values. It is also crucial to provide ongoing feedback and clear expectations to further encourage engagement.

Give them a seat at the table: New advisors are a treasure trove of fresh ideas and unique viewpoints. Recruiting and retaining Next Gen advisors who are eager to ask questions and suggest new ideas can help clarify business goals and strategies and reveal new ways to achieve them. While many younger advisors are often saddled with a large number of small accounts, it is important to make sure they are also given ample exposure to the larger, more impactful client accounts. Mentoring and empowering these advisors to participate in enriching the experiences of the practice’s best clients is key to professional development and boosting engagement.

Trust in tech: Next Gen advisors want a tech stack that will set them up for success. They are used to doing almost everything digitally, which allows them to use technology to create an experience that Next Gen investors are seeking. Look to these Next Gen advisors for honest feedback on your current tech stack, as well as input on how to further enhance the experience of both staff and clients.

Embrace diversity: Creating a diverse and inclusive workplace is mutually beneficial to both new advisors and existing practices. For example, women now make up 51% of the U.S. population and control over $11 trillion in financial assets, with more than 70% of women who are seeking an advisor preferring to work with a woman⁵. Opening opportunities within your firm to embrace women and minority advisors allows for opportunities to serve markets that have traditionally been underserved while bringing in new clients.

All actively working generations of today bring skillsets that are needed within an independent business model. Together, they can create a powerful partnership that will serve an array of clients, and leveraging Next Gen advisors will help today’s practices remain relevant.

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1 Moss, W. (2022). Taking advantage of the coming Great Wealth Transfer. The Atlanta Journal Constitution.

2 “It’s Time to Change Your Mind about Young Investors.” Fidelity Clearing & Custody Solutions, 18 Jan. 2023, clearingcustody.fidelity.com/app/literature/item/9907600.html.

3 “Cerulli: 40% of Advisory Assets Will Transition in 10 Years...” Cerulli Associates, 13 June 2022, www.cerulli.com/press-releases/40-of-advisoryassets-will-transition-in-10-years-according-to-cerulli.

4 “9 Employee Engagement Statistics You Should Know for 2023.” Wellable, 22 Dec. 2022, www.wellable.co/blog/employee-engagement-statistics-youshould-know/.

5 Railey, M. (2022). Female advisors are the future of wealth management. Financial Advisor Magazine.