A staggering $120 trillion is set to be inherited over the next quarter-century, according to Cerulli Associates. But here's where it gets controversial: most of these heirs won't be sticking with their parents' wealth advisors.
Only a small fraction, 27% to be precise, of future beneficiaries plan to continue with their benefactor's financial guidance. And this is the part most people miss: it's not because they want to go it alone.
In fact, half of those surveyed already had their own trusted advisor, while 28% simply lacked a relationship with the family's advisor. Just 14% didn't want any financial advisor at all, and only 10% cited specific investment needs not being met.
"When the parents pass away in their 70s or 80s, the inheritor is often in their 40s or 60s, and they've already established their own wealth management relationships," explains John McKenna, a research analyst at Cerulli.
But here's the real kicker: most wealthy benefactors don't seem to mind. Despite expressing satisfaction with their advisors, many are ambivalent about whether their heirs continue the relationship. Only a quarter wish their heirs would stick with the family advisor, while over half leave it up to their beneficiaries.
The crux of the issue, according to Scott Smith, senior director of advice relationships at Cerulli, is that clients are reluctant to discuss their estate plans with their families. Even among the ultra-wealthy, 20% intend for their heirs to learn about their wealth after they're gone.
"Benefactors believe they'll have these conversations before they die," Smith says. "But when we ask the next generation, these conversations often didn't happen."
So, advisors may miss out on connecting with the next generation of clients. It's up to them to encourage clients to have these difficult discussions early on, Smith advises.
"Reinforce the importance of early involvement for the survivor's peace of mind," he suggests. "It's not just about retaining assets; it's about making the transition easier for your loved ones."
What are your thoughts on this? Do you think it's important for families to have open conversations about wealth and estate planning? Or is it a sensitive topic best left unaddressed? We'd love to hear your opinions in the comments!
