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How Advisors Can Prepare Clients for the Great Wealth Transfer

Updated: Dec 15, 2021


A couple meets with their adviser.

The estate planning ecosystem went through big changes during the pandemic as more people started to think about their mortality and users adopted technology in every aspect of their lives.


Now, the estate planning industry is in for another big disruptive shift with the Great Wealth Transfer.


In the next 20 years, Canadians will inherit an estimated $1-trillion—the largest intergenerational wealth transfer in Canadian history. Baby boomer women and millennials are the two main demographics who will inherit that wealth.


As a financial advisor or planner, you work hard to retain clients and grow their investment with you by providing targeted, specialized, and high-value services. You probably understand your current clients needs inside out—but how well do you know your clients’ children, grandchildren, or spouses?


Big changes are around the corner, and a whole new generation of clients are going to need your expert advice.


Let’s make sure you’re set up for success.


Financial planning for baby boomer women

First, where exactly is that Great Wealth Transfer—all $1-trillion of it—going?


Millennials are set to inherit their baby boomer parents’ assets in the next 20 years —but before those assets are inherited by the children, they will usually pass to the surviving spouse first. Since women tend to live longer than men, that means a lot of baby boomer women are set to inherit the family finances first.

The experts at Strategy Marketing found that 70% of women will switch financial planners within a year of their spouse’s passing. Why do so many women experience a disconnect with their financial planners? There are multiple factors at play, including assumptions that their husband handles the finances, experiencing demeaning behaviours, and not being taken seriously.

Text reads " 70% of women will switch financial planners within a year of their spouse’s passing." Links to https://www.strategymarketing.ca/wp-content/uploads/Why-women-leave-their-financial-advisors-and-how-to-prevent-it.pdf

Do you view the spouse or partner of your client as “my client’s wife”? If so, it might be time to invest in a relationship with both spouses. While couples may have different arrangements for who handles the financial planning in their relationship, it’s important to maintain a connection with each spouse or partner. Think of it this way—would you trust someone to manage your assets if you’ve never spoken to them?


You may know the ins and outs of an estate but if the surviving spouse doesn't know you, chances are they will be part of that 70% who goes elsewhere. Having all of your client’s information stored in one place makes it easier to have a holistic understanding of their life and legacy plan, in addition to getting to know the surviving spouse.


Financial planning for millennials

Anyone born between about 1981 and 1996 is considered a millennial which means in 2021, the oldest millennials are turning 40. They’ve endured not one but two economic crises and have a higher cost of living and student debts than their parents did at their age.


They also view wealth differently than their parents. In a recent survey, 79% of millennials around the world “say they believe societal causes have become more important than wealth accumulation in defining their legacy.” Things like socially responsible investing are more important to millennials than it is to their baby boomer parents.



Text reads "24% of millennials demonstrate basic financial literacy." Links to https://www.businessinsider.com/not-all-millennials-are-financially-literate-pass-this-test-2019-4

According to another survey conducted by TD, about 46% of millennials who inherited assets wish they would have gotten the advice of a professional, with 45% inheriting more than they expected. Add in the fact that only 24% of millennials are financially literate and it’s very clear the need for financial advice is there.


It’s crucial to have a holistic understanding of your client’s estate and their life and legacy needs. These clients don’t just care about what happens to their estate when they pass—they care about the impact they’re having on the world around them right now.


Millennials and baby boomers have more in common than you think

While millennials typically look for tech features with banking, that’s not the only thing they look for in a financial institution; they also want a human touch.


Providing services that balance both of those aspects helps retain more of the assets you’re managing. This is especially true for the 41% of millennials who prefer to bank at the same institution as their parents or other family members.


One common misconception is that baby boomers aren’t tech savvy but this couldn’t be further from the truth. In fact, 92% of baby boomers prefer online banking and 71% report logging in to their account at least once a week.


It’s clear that advisors need to provide millennials and baby boomers with services that combine technology and human interaction if they want to offer comprehensive financial advice for these two demographics.


Be someone family members can rely on in difficult times

We know that 70% of women will switch financial advisors within a year of their spouse’s passing. For inheritors who lose both their parents, that number jumps to 95%. That’s a shockingly high number for a generation of people who are hungry for financial advice—and a huge opportunity for advisors who are willing to put in the effort to understand and cater to the unique millennial perspective.

Text reads "95% of inheritors who lose both their parents will switch financial advisors." Links to https://www.vanguardcanada.ca/documents/retaining-heirs.pdf

One way to avoid this is to start connecting with your clients’ families early on. Should something happen within the family, you have the existing relationships to provide support. You’re no longer a stranger, but instead a familiar face and trusted expert.


Are you prepared for the Great Wealth Transfer?

There is no way around it: The Great Wealth Transfer is coming, and advisors need to be prepared to meet the unique needs of the next generation of clients.


When it comes to financial planning, millennials and baby boomer women have a surprising amount in common. They value personal connections with their advisors, to the point that they are likely to switch advisors if their needs aren’t met.


It’s important that they cultivate a personal connection with you and that you have a holistic understanding of their estate and their needs. These clients don’t just care about what happens to their estate when they pass—they care about the legacy they are leaving today. And finally, they expect that their estate plan will live on the same user-friendly and intuitive technology that they are used to using in their everyday lives.


EstateBox is the forward-looking advisor’s answer to these needs.


Introducing... a life and legacy platform for the Great Wealth Transfer

EstateBox is a digital life and legacy planning platform where clients upload their assets and other important documents like their will, power of attorney, and health directive. They can then grant access to individuals like advisors, executors, and trusted family members as required. With EstateBox, you have access to a well-rounded picture of your clients’ lives and assets, even if their investments are not through your financial institution.


Text reads "With EstateBox, you have access to a well-rounded picture of your clients’ lives and assets, even if their investments are not through your financial institution."

This allows you to provide personal and targeted advice; instead of seeing just a few puzzle pieces, you see the complete picture. And, with all of the information you need captured in one place, there’s no need to search for the right documents during meetings, freeing up time to get to know your clients.


Everything you need to know about their life and legacy plan is available to you on one secure platform that gives both you and your client a well-rounded picture of their estate. For millennials who may have inherited money but don't know what to do with it (and want to leave a lasting legacy) and baby boomer women who haven't always had access to their full financial reality... this is huge.


All of this info lives on one safe, secure platform that clients can keep up to date from the comfort of their homes. Not only is this more convenient for clients with busy schedules, it’s also more accessible for clients who may have a difficult time physically traveling into your office.


Text reads "“Now that clients have spent the past entire year getting comfortable online, they will have expectations that their advisors have gone digital too. - Sharon Hartung"

Sharon Hartung, author, speaker, and one of the leading voices in digital estate planning, nailed it when she spoke at the BC Estates Forum earlier this year. “Now that clients have spent the past entire year getting comfortable online,” she said, “they will have expectations that their advisors have gone digital too.

According to Hartung, leveraging user-friendly technology with estate planning is table stakes these days. “If you aren't using a creation technique online with your clients or you don't have a website, you're going to fall behind,” she cautioned.


***


The $1-trillion Great Wealth Transfer is on its way, and disruption is just around the corner. The next 20 years of estate planning are going to look very different from the last 20 years.


Those advisors who wish to retain clients and win new clients in this new world will have to be agile in their approach, open to a set of diverse client needs, and prepared to embrace new technology


Get prepared. Visit our site to learn how EstateBox can help you cater to your next generation of clients.



While we’re passionate about all things estate planning, we’re not professionals. We recommend speaking with your lawyer or financial advisor when putting together an estate plan.


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