There will be no starting gun for the Great Wealth Transfer. For financial advisors looking to participate, it is already here.
As generational wealth is passed down from Boomers to their Millennials & Gen Z children, there is a vast opportunity for advisors to assist families optimize the planning of their financial legacies.
The numbers are vast—and inevitably vague. $60 trillion over the next 20 years, $80 trillion over 25. Whatever the number might be, half of the personal wealth in the US is held by this single demographic. Naturally, much of this resides in ultra-HNW families, but the Great Wealth Transfer promises a gigantic and amorphous klondike with opportunity everywhere.
If your advisory business is not already focused on estate planning, it is important to understand its nature. It inevitably involves a longer game than with most sales processes.
Naturally, there is more of an emotional element in play. This means a sensitive and careful sales approach is necessary. However, this environment really is a good one for producers who are able to propose solutions using storyselling techniques.
One example story here is the one of the modest legacy that allows surviving adult children to use a regular annuity dividend to take a family trip to Disney World every year, and thereby remember the person who made it possible. Stories that create an emotional tie to a client’s money can really resonate.
To start, dig in your own book of business. Who among your client base might be thinking about how to pass on their wealth? Your estate and legacy planning expertise and services can then be raised at your next scheduled meeting or showcased through drip marketing campaigns.
Add estate planning content to your website and social media posts, offering free consultations. Look to host legacy-focused webinars, workshops, and seminars. By having a clear subject focus—estate planning—rather than showcasing a product or “retirement”, you will stand a better chance of follow-up.
Many wealth holders will be looking to diversify portfolios and minimize risk. This is where the flexibility of annuities comes in. Recent product development and improved flexibility has made annuities a useful estate planning product. Despite the rise of annuities in recent years, people are still unaware of many of the whistles and bells available.
Establishing a partnership with estate planning lawyers can be a useful strategy for generating leads here. This arrangement benefits both parties, as you can reciprocate by referring clients to them. Allying with a trusted law firm also lends your practice some kudos.
When it comes to the dollars and cents of estate planning, at the center is tax-efficiency.
Annuities are an ideal tool for mitigating risk, of course, and in the legacy environment, they can be sold as a safe bet amongst other investments. Realistically, a wealthy family is unlikely to allocate all its funds in an annuity—but the pitch can be that the annuity’s security allows more resources towards investments, trusts, and other methods that can generate and secure their wealth.
To effectively capitalize on the Great Wealth Transfer, advisors need to consider the different financial attitudes and preferences of each generation. Baby boomers tend to prioritize wealth preservation and retirement planning, while millennials and Gen Z often look to socially responsible investments and digital financial solutions. By tailoring services appealing to diverse generational demands, advisors can establish meaningful connections and build long-term client relationships.
The legacy for the young and the fortunate may have to wait a few more years, but the dividend for astute advisors could come a lot sooner.
Next month we will address how advisors can connect with younger generations and ensure their own legacies.