Wealth Transfer Planning Vital for Advisers to Retain Client Assets

Between now and 2048, older households are projected to transfer $123.7 trillion to heirs, representing a huge opportunity for the advisory, investment and retirement industries as strategies and stakeholders shift their focus beyond Baby Boomers, according to a recent report from research and consulting firm Cerulli Associates.

Generation Xers are expected to receive $39 trillion and millennials $46 trillion from older relatives. Baby Boomers are projected to give away $79 trillion, the most of any generation, according to the the “Cerulli Edge- The Americas Asset and Wealth Management Edition.”

Generation X has also been subject to much more financial and career turbulence earlier in their financial careers than expected, according to senior analyst Chayce Horton. This group saw their median net worth fall 38%, from $63,000 to $39,000, between 2007 and 2010.

“With stunted market growth from 2000-2010, many Gen X households lack a sense of comfort with their future retirement,” he says.

The report found that of those who expect to receive a substantial inheritance, the money will come at a crucial time because these households are in their “sandwich years.”

This means that these households are financially tied to their children while also burdened with the responsibility of caring for aging parents.

Relating to Inheritors

According to Cerulli, quality relationships continue to be key for driving assets in the wealth management space, with 91% of high net-worth practices reporting having spouses of clients actively involved in the financial planning process in 2024.

This number has increased over the last decade, which the report says is promising due to the vast amount of wealth that is set to be transferred to clients’ spouses over the next 25 years through great wealth transfer, according to the report.

Having clients’ partners involved in the financial planning process can make contacting widowed spouses less difficult for both parties and “has proven to increase asset retention when spouses inherit substantial wealth,” according to the report.

When it comes to clients’ children, 57% of HNW practices said they have not had more than limited interactions with them. This is a concerning trend, Cerulli notes, considering next-generation clientele are set to inherit more than $100 trillion in assets over the next 25 years.

Firms also retain 87% of the assets transferred to clients’ spouses. This number decreases to 62% when the assets are transferred to clients’ children and to 40% when assets move to grandchildren, according to the report.

The report says these numbers are congruent with the success and shortcomings of advisers and “show that when advisers make a greater effort to bring potential inheritors in toto the fold, the assets will follow.”