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Baby Boomers control more than 50% of the nation’s wealth, nearly $68 trillion in assets.

What happens when those assets transfer to the next generation in coming years? 1

Dubbed the Great Wealth Transfer (GWT), this financial phenomenon presents a number of opportunities for those who inherit the wealth. It also poses some potential challenges for the high percentage of advisors who have limited, if any, contact with their Boomer clients’ children and grandchildren.

Understanding how each generation views finances will help advisors break down barriers, build trust, and ensure long-term multigenerational client continuity to fuel future business growth.

By the year 2030, all Baby Boomers will be at least 65 or older, contributing to the overall aging of the U.S. population. By 2034, adults 65 and older are expected to outnumber children under the age of 18 for the first time in U.S. history.2

Overcoming Baby Boomers’ “Not Now” Attitudes

Wealth transfer planning is sometimes perceived as something to be done closer to death. Assumptions that there will always be “plenty of time for that conversation” could be detrimental for Baby Boomer clients.

It’s critical to be a proactive advisor. To keep wealth transfer planning moving forward among Baby Boomer clients:

  • Emphasize the importance of not putting off financial decisions. 
  • Create a sense of urgency around next steps.
  • Clarify your understanding of client objectives, and be sensitive to how your services align with their goals.

Changing Financial Perspectives

The measured approach to wealth transfer planning that some advisors take with Baby Boomer clients might not be an appropriate approach when dealing with their heirs. In general, Generation Xers and Millennials have different perspectives on money:

Gen Xers

may mirror their Baby Boomer parents in that they are typically conservative with their funds. However, Gen Xers may be more prone to invest in the stock market and make a plan for their financial futures.

Millennials

may not be as trusting in the stock market as the previous generation. Despite there being more Millennials add in this than in any other generation,2 they hold the least amount of wealth.1

Few advisors identify generational wealth transfer as a business risk. It’s a compelling reminder to serve existing Baby Boomer clients and retain relationships with their heirs.

QUESTION:

It’s a common understanding that many younger generations may fire their Baby Boomer parents’ financial advisors once they begin collecting inheritances. Do you know your clients’ children?

Serving, Maintaining, & Expanding Client Relationships

Be willing to moderate GWT conversations between parents and heirs. Use these tips to make the interactions meaningful while maintaining your impartiality:

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CLARIFY WEALTH TRANSFER PRIORITIES AND READINESS

Baby Boomers should clearly prioritize their goals and objectives for retirement and what they want their post-working lives to look like. Sharing their plans and intentions allows their Gen X and Millennial heirs to ask clarification questions and express any concerns. This is an opportunity for advisors to determine how their clients’ retirement readiness could reshape inheritance plans or wealth transfer strategies.

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REVIEW AND VERIFY ESTATE PLAN INFORMATION

Future decisions will likely have to be made about care, expenses, and how they could impact wealth transfer. Understanding the mindset about how Baby Boomers want their estates handled—and by whom with regard to power of attorney, executor/trustee, and healthcare—clearly delineates expectations that will head off confusion. Work with all family members to reach mutually agreeable roles, and emphasize your willingness to work alongside them.

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DOCUMENT

Encourage Baby Boomers to share the location and content of documents such as wills, estate plans, and financial paperwork with their proposed heirs. Gen Xers and Millennials can also be quite helpful in reviewing documentation and should be encouraged to reach out to you for advice regarding eventual wealth transfer.

These approaches may help open lines of communication. They’re the first steps in helping your clients break down barriers and building trust for generations to come. 

The Great Wealth Transfer is rapidly gaining traction. Helping your Baby Boomer clients navigate its complexities and connecting with their heirs are paramount in order for advisors to demonstrate value and grow future business. 

For additional strategic ideas and guidance on how to navigate clients during the Great Wealth Transfer, talk with your CUNA Mutual Group annuity wholesaler, or call the CUNA Mutual Annuity Solutions Desk at 877.345.GROW (4769). 

Transfer-Wealth

 

Acting as an objective facilitator, a financial advisor can help steady nerves on both sides of the GWT discussion.