A massive wealth transfer is on the horizon, with over $120 trillion expected to be inherited over the next 25 years. But here's the catch: most heirs aren't sticking with their parents' wealth advisors. A shocking revelation, right?
According to Cerulli Associates, only a small fraction of future beneficiaries plan to continue with their benefactor's financial guidance. The survey, which focused on investors with significant assets, revealed that just 27% of those inheriting wealth intend to keep the family advisor. And for those who have already inherited, the number drops even lower to 20%.
So, why the disconnect? It's not as simple as heirs wanting to go it alone. In fact, the majority of heirs who choose a different path already have their own trusted advisor. Or, they simply didn't have a relationship with the family advisor, which is a common reason for change.
"When the inheritor is between 40 and 60, they've likely already established their own wealth management relationships," explains John McKenna, a research analyst at Cerulli. "They're not starting anew; they're building upon existing relationships."
But here's where it gets controversial: 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 the decision to their beneficiaries or express uncertainty.
And this is the part most people miss: the root of the issue lies in communication. Clients often avoid discussing estate plans with their families, even when they have substantial assets. Scott Smith, senior director at Cerulli, highlights this: "Benefactors assume these conversations will happen before they die, but they often don't."
As a result, advisors miss out on crucial opportunities to engage with the next generation and showcase their value. It's a delicate balance, but advisors must encourage clients to have these uncomfortable conversations early on, ensuring a smoother transition for their survivors.
So, what's your take? Do you think heirs should honor their parents' wealth advisors, or is it a natural progression to seek their own financial guidance? We'd love to hear your thoughts in the comments below!
