The Great Wealth Transfer

How are you attracting next generation investors?

In “The Great Wealth Transfer is Coming, Putting Advisers at Risk,” an article in Investment News, they pointed out that 66% of heirs fire their parents’ financial adviser after they receive an inheritance. Marketing Wiz’s “The State of Independent Financial Marketing” whitepaper discusses how every day, $2 billion in assets move from Baby Boomers to Generation X and Generation Y heirs. Combining these two statistics paints a concerning picture for financial advisors. How can Wealth Management firms address the needs of these inheriting children, to prevent losing 66% of their asset base?

Part of the problem is that Generation X and Generation Y approaches the world, and their finances, differently than the generations before them. With more access to information, more options for interaction channels, and an increasing pattern of self-service, building a relationship with a young heir can be more difficult. Additionally, the younger generation is tackling massive amounts of personal debt, low-paying jobs or difficulty finding work, and negative stereotypes about everything from their work ethic to how they manage their money. This has led to a lot of mistrust around financial organizations and the methods of the older generations.

The awareness of this is reflected in the Investment News article, which shows that advisers rank difficulty attracting next-generation clients as 10.45% of their business risks. Adding the 12.79% risk of generational wealth transfer, and the needs and expectations of the younger generations make up almost a quarter of business risk as ranked by advisers.

Investment News also shows that lack of a relationship is the biggest obstacle to retaining assets passed to heirs. Without a personal relationship, heirs have no reason to trust a financial advisor with their money. Because the younger generations are used to doing self-service financial management, and don’t necessarily recognize the value of personal adviser service, building that relationship is increasingly important.

NexJ Intelligent Customer Management can help your financial advisors build and maintain relationships with your clients’ entire families. Using the NexJ Relationship Hierarchy, your advisors can have a better awareness of the people in your client’s family, including their ages, needs, life events, and goals. Combined with intelligent business rules that drive proactive, next best actions, your advisors can manage these relationships automatically. NexJ can prompt advisors on the best time to reach out to younger family members, and can show advisors when and how to include them in the family’s overall financial planning. NexJ does this by providing suggested content or reasons for the interaction when appropriate, and delivering the content in the individual’s channel of choice, reaching the younger family member by their preferred method. Additionally, by maintaining profile information in NexJ CRM, and leveraging your comprehensive customer view, NexJ can automatically generate tasks, prompt for interactions, and help you collect information. The related results are captured and monitored, and then consolidated back into the comprehensive customer view, establishing a continuous cycle of refinement and improvement. By engaging your future clients earlier, you can overcome the challenge of building a personal relationship with them when they become the decision maker.

By leveraging the features of Intelligent Customer Management, your advisers can work to proactively establish relationships with the future inheritors of today’s wealth assets. For more information on how NexJ can help advisors deepen their relationships, visit www.nexj.com, or email info@nexj.com

Author: Adam Edmonds

Vice President, Products

With almost 2 decades of experience developing customer management solutions in financial services and insurance, Adam Edmonds is responsible for establishing overall product vision and designing easy to use solutions that solve real market problems.

Adam is excited to share the lessons he has learned and his insights on where the industry is heading with readers of his blog. He encourages readers to join the discussion or reach out to him with their own insights, best practices, and solutions to industry challenges.