How to Position Your Firm for the Great Wealth Transfer

Now is the time to start preparing your firm for the impact of the Great Wealth Transfer that will occur over the next few decades.

The largest wealth transfer in American history will occur over the next quarter century when up to $68 trillion passes from baby boomers to members of Generation X and Millennials, according to Cerulli Associates. To put this number in perspective, the entire gross national product (GDP) of the United States is about $22 trillion, or less than one-third of this amount.

Dubbed the Great Wealth Transfer, this financial shift is going to have an enormous impact on the financial advisory industry by dramatically changing the wealth management landscape. The stakes couldn’t be higher for financial advisors — the longterm viability of your firm will depend on your ability to navigate this transition successfully.

Successful firms will be the ones that can help older clients create strategic estate plans while welcoming younger clients on the receiving end of this transfer into the world of wealth management and investing.

How wealth will be transferred

According to the U.S. Census Bureau, there are currently about 73 million baby boomers in the United States. (Baby boomers were born between 1944 and 1964.) Collectively, boomers hold between $30 trillion and $40 trillion in assets and constitute the majority of most advisory firms’ clientele.3 Gen Xers (born between 1965 and 1980) are expected to inherit a little over half (57%) of the assets during the Great Wealth Transfer with the rest going to Millennials (born between 1981 and 1996).

The financial circumstances of these younger generations are different from those of their parents. For example, Millennials and Gen Xers combined control just over one-third (36%) of the nation’s wealth, compared to the 50% controlled by baby boomers. (Members of the Silent generation born before 1946 control 14% of the nation’s wealth.)

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