How To Prep Clients for the Great Wealth Transfer

It’s probable that, particularly over the past several years, advisors have spent more time readying clients and their heirs for the great wealth transfer.

Such preparation takes on added importance with thousands of baby boomers retiring every day and with many folks in younger demographics ill-equipped for solid retirements. Indeed, the great wealth transfer is aptly named.

“$84 trillion in assets is set to change hands over the next 20 years, according to estimates by the consulting firm Cerulli Associates. The recipients, primarily members of Generation X (those born between 1965 and 1980), millennials (1981-1996) and Gen Z (1997-2012), are expected to inherit $72 trillion of that amount, mainly from baby boomers, with the rest going to charity,” according to Merrill Lynch research conducted in 2022.

Working on the premise that $72 trillion will flow from boomers to Gen X and millennials, it’s logical that advisors should starting catering to those heirs now. For some fun fact context on $72 trillion, that’s nearly 25 Microsofts.

GWT Prep Is Essential

Advisors often hear the phrase “value add” and if ever the was a value add, it is great wealth transfer preparation. Estate planning is an excellent place to start.

“Every client should have basic estate planning documents in place, and legacy and estate planning is an important part of anyone’s financial journey,” according to Nationwide. “A will is a simple way for clients to take control over who gets what, while avoiding state intestacy rules. Many clients will also benefit from trust planning. Trusts can help avoid probate (a court supervised distribution of assets) and can be very helpful in controlling how assets pass to beneficiaries over time.”

Due to tax implications and other estate planning-related complexities, advisors can enhance the value proposition by offering up (or having on staff) accountants and attorneys.

“Having a referral relationship with one or more local attorneys can be critical to this aspect of the wealth transfer process,” adds Nationwide. “ It’s important to remember that while a financial professional can identify issues to be addressed, clients will need legal assistance in drafting documents and putting the estate plan in place.”

Emphasize Beneficiary Clarity

As noted above, boomers will be leaving the bulk of their wealth to heirs, but knowing that is only part of the battle. For clients, particularly those that are married with multiple children and at least one grandchild, beneficiary clarity is essential because it enhances efficiencies and reduces costs.

Being proactive on the beneficiary front is increasingly important because so many clients have multiple accounts.

“For many clients, beneficiary designations on financial accounts will control the transfer of much of their wealth,” concludes Nationwide. “Retirement accounts, annuities, and life insurance will all pay out to the beneficiary on file with the custodian of the asset, regardless of any other estate planning they’ve done. It’s therefore critically important for clients to regularly check those designations for accuracy, especially after big life events like births, deaths, marriages, and divorces. An overlooked mistake on a beneficiary designation can have massive implications in a client’s overall wealth transfer plans.”

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