Preparing for the great wealth transfer

By Caspar Wergeland
4 December 2023

Blog > Preparing for the great wealth transfer

A seismic shift is underway as Europe’s baby boomers transfer over an estimated €100 trillion to their Gen X, millennial and Gen Z heirs over the coming years. Dubbed “the Great Wealth Transfer,” this represents a make-or-break moment for wealth managers in the region.

Forward-looking wealth management firms have an unprecedented opportunity to cement multi-generational loyalty. By starting conversations early, proving their worth and offering cutting-edge digital capabilities, firms can gain the trust of both existing clients and their more tech-savvy successors. For wealth managers willing to adapt, this “Great Wealth Transfer” signals the start of even greater successes ahead.

Up to 90% of family wealth disappears by the third generation. Firms that fail to establish ties with clients’ heirs face losing those assets for good. Yet with the right strategies, this period of change offers significant relationship-building and revenue-growth potential.

The problem: A potential mass exodus of clients

Studies show 80% of millennial inheritors seek out new financial advisors after they gain control of assets. Wealth managers attuned to boomers’ preferences risk being ill-equipped for the next generation’s priorities. From new investment styles to increased interest in other asset classes, investment products and ESG, younger clients have different sensibilities. They also expect digitally powered and highly personalized services on par with Big Tech experiences. However, just 50% of high-net-worth individuals are currently satisfied with wealth managers’ digital capabilities, and these are arguably far below the expectations of the coming generation. Without urgent efforts to connect with heirs, firms face the loss of entire family accounts within a few short years.

Three vital tactics to retain assets long-term

  • Act now, don’t wait
    Wealth managers must engage the next generation before inheritance. Assign younger staff to cultivate peer relationships. Make heirs feel valued through financial advice and introductions to professional networks. Starting to build trust and rapport now is critical. Firms who believe their existing brand and past performance will ensure a smooth transition are in for a shock.
  • Become indispensable
    Understand exactly what clients’ offspring prioritize, from on-demand access to ESG portfolios. Then highlight how your specialized services address those personal goals, and why you are their best option.
  • Up your technology game
    With three-quarters of young investors believing traditional stock and bond investing is insufficient, wealth managers need scalable portfolio personalization powered by cloud data. New, tech-based, communication models and digital experiences are expected, to enable collaborative discussions about their investments.

Seizing the wealth transfer opportunity

Investment manager’s success will depend on their ability to keep up with the demands of the next generation. Embracing change and creating an agile culture will be key. Firms will have to adapt their investment products and services to align with what heirs want and expect. But how? The short answer is technology that enables evolving business models and continued growth. With the right technology – coupled with the right mindset – investment managers can unlock great potential in the future.

Gain further perspective in our latest paper: The great intergenerational wealth transfer: 3 critical success tips for wealth managers.