Advisers need to prepare for multi-trillion dollar wealth migration: SSGA
Advisers are being urged to prepare themselves to play a key role in facilitating the greatest intergenerational migration of wealth in history.
The State Street Global Advisors Roadmap for a new landscape — managing the transition of wealth between generations report, forecast that between 2011 and 2048, baby boomers in the US are expected to transfer US$30 to US$41 trillion to generation X and millennials.
The report found that although 80 per cent of clients said they intended to transfer their wealth to younger generations, just 45 per cent had a plan in place.
"Advisers have long known that wealth transfer — and planning for it — is too often thought of by clients as an action to be taken only toward the conclusion of one's life and career," the report said.
"Advisers have an instrumental role to play in ending this avoidance behaviour, but are not being proactive enough in engaging clients in the wealth transfer process earlier.
"Effective preparation for the next generation starts with helping investors expand their definition of wealth to include both financial and non-financial factors.
"So, for the adviser, the prevailing attitude should be, ‘it's never too soon to do that'."
However, the report found that 50 per cent of financial planners had a clear strategy for engaging the next generation of investors, despite data showing that less than 40 per cent of investor retain the same adviser after their spouse dies, while only 29 per cent of inheriting children use the same adviser as their parents did.
AUTHOR
Nicholas O'Donoghue
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