Next-gen heirs will stick with the family advisor if these conditions are met

The average life expectancy in the U.S. is currently 76 years — which by coincidence matches the age of the oldest members of the baby boomer cohort (those born between 1946 and 1964). That means the much-discussed great wealth transfer is finally beginning to unfold, with $84 trillion expected to shift from boomers to their millennial and Gen X heirs between now and 2045. 

Sarah Blesener/Sarah Blesener for Blink

Conventional wisdom holds that the great majority  of client assets — Cerulli puts it at 70% — will be directed elsewhere when boomer clients pass away, as younger heirs with different styles, preferences and expectations inherit significant estates. Wealthy millennials, for example, are widely reported to eschew traditional advisors in favor of working with robo-advisors or stock-picking on their own and investing in riskier assets like crypto. 

But according to a survey we conducted in late November, one which canvassed Gen Xers and millennials who expect an inheritance and whose parents or grandparents currently work with a financial advisor, the picture is more optimistic. It found that although just 47% of respondents currently have an advisor, 79% said they are more likely to work with one after inheriting. What's more, 73% said they plan to make finding an advisor one of the first things they do upon receiving their inheritance, with 66% indicating they're likely to use their family's existing advisor. 

Advisors should certainly take heart from these findings. But at the same time, they cannot afford to be complacent. The survey yielded up insights that planners can act upon today to keep heirs onboard while growing their own businesses against the backdrop of the great wealth transfer. 

Meet with your clients' children — today  
Coincidentally — or not — the 66% of respondents who indicated that they were likely to eventually work with their family's advisor was quite close to the share of respondents who said they'd met at some point with their family's advisor — 69%. Furthermore, the most-cited factors in heirs' decision to go with the family advisor were not technological know-how or social values, but rather whether family members spoke favorably about the advisor (45%) and the advisor's knowledge of estate planning (41%). This goes to show that the strong relationships advisors have worked hard to build remain incredibly meaningful. Building a rapport with clients' children today can only boost the odds in favor of a future working relationship. 

Gain estate planning expertise  
The prospect or reality of an inheritance will serve as a major catalyst for next-gens to revisit — or to visit for the first time — their estate plans. In the survey, 59% of respondents said they'd started or completed their estate plans, but just 16% of respondents have estate plans that are complete and up-to-date. Many people have growing or changing family dynamics in the early half of their lives, so even plans that have been completed often require rounds of updating. Seventy-three percent of respondents said estate planning will become a bigger priority for them after they inherit. For these individuals, savvy advice on preserving and growing intergenerational wealth will be highly prized. Advisors who sharpen their expertise in this area will be well-positioned to gain the trust and loyalty of next-gens.

Focus on female heirs  
When it comes to money, traditional gender roles are evolving. Women today graduate from college more often than men and they play a much more active role in familial investment decisions. Contrast that with the survey findings that fewer Gen X and millennial women work with an advisor today (40%) than men (55%) and that they're much less likely to have met with their family's advisor (60% as opposed to 79% for men). Interestingly, women are more age-agnostic than men when it comes to working with younger advisors: 52% of male heirs prefer a younger advisor as opposed to 33% of women. Clearly, appealing to women clients is crucial to the long-term success of an advisor's practice. Given the correlation between having met with a family's advisor and the stated likelihood of working with that advisor in the future, focusing on daughters of clients presents a large opportunity. 

In summary, the notion that heirs will move their inheritances from the family advisor to self-directed accounts in wholesale numbers is potentially overblown. Those advisors who maintain strong relationships with their current and prospective clients, who understand and help with estate planning and who prioritize outreach and education with daughters of clients could be set to survive and thrive in the great wealth transfer.