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Over the next two decades, at least $36 trillion in wealth — and perhaps as much as $105 trillion — will be passed down within families, the majority from baby boomers to their kids and grandkids.
The so-called “Great Wealth Transfer” has drawn attention both for the impacts it will have on millions of heirs across the country, and for the opportunities and challenges it presents for financial advisors, estate attorneys and other professionals who help people manage their money, especially wealthy families.
“The transfer of wealth will provide an opportunity for current financial planners — as well as those looking to get into the industry — with a chance to really be able to work with families in a way that is impactful for generations to come,” said Amy Leis, a certified financial planner who owns Juno Wealth Management in Moorestown.
Planners in and around Philadelphia said their challenges include avoiding the loss of clients when the younger generation takes over, and potentially seeing families stop using professional advisors entirely. Surveys suggest that the vast majority of affluent investors don’t use their parents’ advisors, and that young people overall tend to rely less on professionals for financial advice.
The shift also highlights the importance of taking care to work out how relationships and financial governance are managed within families, especially for large or high-net-worth families, or when control of a business or pool of investments is at stake.
“The amount of wealth that is changing ownership certainly calls for integrated and holistic financial planning, and this really lies at the heart of family wealth management,” said Raphael Amit, a professor of management at Penn’s Wharton School, who studies succession at family-owned firms. “You need to consider and balance both financial objectives and other objectives that the family has. There are multiple objectives that are not always aligned.”
The wealthy and the not-so-wealthy
Wealth transfers from 2025 to 2048 could total $124 trillion, with $105 trillion going to heirs and the rest to charity a Boston consulting firm. Another estimate from 2023 put the figure at $84 trillion, while a study from Visa that left out the wealthiest 1% and subtracted taxes and debt predicted that $36 trillion will be passed down
The majority will be transferred within the wealthiest 10% of the population, and most Americans will not inherit anything. However, some middle-class and upper-middle-class Gen Xers, millennials and Gen Zers are expected to receive assets totaling several trillion dollars.
Ajay Kaisth, a certified financial planner and owner of KAI Advisors in Princeton Junction, said he has 50 client households, 80% of which do not qualify as high net worth.
“They are middle-income, upper-middle-income level people who will have assets to transfer. There will be a transfer pretty much across the board,” Kaisth said.
“Everyone deals with, unfortunately, the death of a loved one and having to transfer accounts and having to deal with beneficiary and titling and all of that. It doesn’t matter what level of wealth,” said Celeste Revelli, a former financial advisor who is vice president of financial planning integration at Fidelity Investments in Philadelphia.
Leis said some of those heirs may receive a relatively modest sum, such as $100,000 or $200,000, that can still make a major difference in their lives. In the Greater Philadelphia area, which spans three states, it’s also not uncommon for parents to pass down a home, or a second home, which presents its own set of challenges and decisions to make, she said.
“Maybe the younger generations are living in one state, and they’re inheriting assets that were owned by people that live in a different state. You also have a lot of people here, both in New Jersey and Pennsylvania, whose parents perhaps own a place down in Florida, and then that becomes an issue as well,” she said.
Cerulli projects that $54 trillion will be initially inherited by a spouse, which Kaisth said points to the importance of including them in financial planning discussions.
“I’ve always encouraged and preferred to have both spouses in every client conversation and meeting by design. God forbid something happens to one spouse, the other spouse should be as well-educated as he or she chooses to be in the financial planning picture of the client,” he said.
Teaching children financial management early
There’s something of a debate among financial planners about whether they should try to keep the children of clients as clients too, given the data showing that heirs generally don’t plan to use their parents’ advisors. Some professionals argue those individuals still need financial advice, while others say it’s unrealistic for an advisor to expect they can switch over to serving a different generation.
Kaisth and others stressed the importance of bringing younger family members into conversations, in part, as a way to keep them as clients in the future, but also to educate them about financial management generally. If children have any earnings, their parents can start Roth IRAs for them, for example, or the kids can learn how 529 accounts will help pay for their college education.
“I do let [clients] know if they want to have an efficient, less stressful or perhaps stress-free transfer to the next generation, which every parent should want, then it’s better to start educating them about what it means to earn money, what it means to value money, how it can buy them options,” Kaisth said.
More education is essential for younger people who will be involved in overseeing a family business, even if they themselves are in a different profession, Amit said.
“It’s important that the next generation knows accounting, and they know how to read an income statement, how to read a balance sheet, how to prepare a cash flow report. Basic things,” he said. “It’s really, really important to engage them, because they will assume a major responsibility, and you have to be prepared for that.”
Amit and the others noted the growing impact of financial websites and apps that use artificial intelligence, which younger people are more likely to use and trust than their parents. None said they were concerned about losing work to newer financial technologies, but they warned against depending solely on AI-generated advice.
“We know that AI is still making a lot of mistakes. It does not always use up-to-date information,” Leis said. “AI also, at least the way that it is right now, it’s not proactive, so it’s not calling you, it’s not emailing you and saying, ‘Hey, by the way, have you talked to the estate, or have you filed this paperwork, or have you done this or that?’”
“AI is great and will give you insights that you couldn’t come up with on your own,” Amit said. “But that’s not a replacement for a trusted advisor.”
A more human-centered approach
The Great Wealth Transfer coincides with a wave of consolidation in the financial planning field as a generation of older advisors retire and sell their businesses, and banks and private equity investors see opportunities for big profits. Small firms also sometimes look to partner with larger ones that can handle their technology, compliance and overhead responsibilities.
Actual transactions are now handled by automated processes, and what customers increasingly need is planning, education and handholding during difficult life events like the death of a parent, Revelli said.
“These larger firms are now offering financial planning because they realize that there’s a need for more human-centered advice, and that’s the value that these smaller firms traditionally have had,” she said.
In general, to attract and keep clients, big institutions are focusing more on building relationships, she said.
“Advisors increasingly find themselves doing less of the transaction spreadsheet paperwork and more mediation and more counseling through these family dynamics, these conversations that these families need to have to really get to a good place,” she said. “There’s no one really at [the] center of having that family conversation, and the advisor is really positioned to do that, especially if they’re going to continue on with that relationship.”
Fidelity is also focusing on the “unique needs of women,” who are increasingly both bequeathing and receiving wealth transfers, and the greater diversity of Americans who are heirs and could benefit from planning assistance, Revelli said.
“In that great wealth transfer, recipients are going to look different than the people traditionally who have been seeking formal financial services,” she said. “There’s a wider demographic that needs help, but they also need a more human-centered approach than before.”
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