Winning young heirs as clients is key to growth for many wealth management firms, but few of them see it as a true priority.
A new report by Financial Planning’s parent company Arizent explains how advisors can catch up with peers who are further along in wooing the next generation of rich clients. Industry research firm Cerulli Associates predicts $72.6 trillion in assets will pass down to heirs through 2045 — in addition to $11.9 trillion headed for charities — in the so-called “great wealth transfer.”
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Arizent’s report, “Capturing the Next Wave of Clients,” was released June 19 and sponsored by Nuveen, which previewed the findings with Arizent at FP’s INVEST 2023 conference.
Surveyed wealth management professionals agreed that client acquisition was a key growth driver, but only 35% deemed younger investors a “critical priority” or “high but not critical priority” to acquire — behind high net worth clients, whose investable assets were at least $1 million but under $30 million, as well as ultrahigh net worth clients, who had at least $30 million, and business owners and retirement plans such as 401(k)’s.
Yet the massive wealth transfer is “already accelerating,” according to Chayce Horton, a research analyst on Cerulli’s wealth management team.
“Intergenerational wealth transfer by HNW households (is) set to double from $700 billion in 2023 to $1.4 trillion annually in 2033,” Horton said.
Read more: Wealthy investors do a lousy job of telling heirs what they’ll get: report
Single-mindedly chasing older ultrahigh net worth investors may mean missing out on where the money really goes when they pass it down — and that could happen soon.
The Arizent study was conducted online in April 2023 and polled 394 respondents, the majority of whom were in senior roles at firms including wirehouses, national/regional broker-dealers and registered investment advisors. 35% of the firms had $1 billion or more of assets under management, 38% had an AUM between $100 million and $999.9 million, and 27% had less than $100 million of AUM.
Scroll down to view key takeaways from the research. The entire report can be found here.
Read more: Exclusive research: Capturing the Next Wave of Clients