Almost half of advisers globally believe the impending intergenerational wealth transfer presents more of a threat than an opportunity, with an estimated $84 trillion passing from one generation to the next over 20 years.
According to the Natixis 2024 Global Survey of Financial Professionals report, 46 per cent of advisers globally consider the intergenerational wealth transfer to be an “existential threat” to their business.
The report found the lack of stability and guarantee surrounding the great wealth transfer worries advisers. Therefore, in the short term, advisers must keep their clients invested and to the nurture the relationship with clients and their families.
Even though in the survey the advisers report holding on to client relationships 72 per cent of the time when the spouse inherits, when a client’s children inherit, retention drops to 50 per cent.
In order to futureproof businesses, the report found advisers should establish they have a relationship with the family of their client, such as through providing personalised services like long-term relationship building, offering family-orientated services like trusts, networking opportunities, and financial boot camps for next-generation heirs.
The survey found that 82 per cent of advisers regularly discuss family wealth planning and 81 per cent are comfortable enough to ask their clients for an introduction to the next generation.
The report shows that advice businesses continue expect one year growth of 11.5 per cent and annualised growth of 12.4 per cent over the next three years.
But to get this growth, the report said advisers will need to add 34 new clients each year for the next three years.
The report suggested that advisers could improve efficiency by appointing one team member to prospecting to enhance efficiency and find new clients.
When it came to the best prospecting methods over the next five years, 51 per cent of advisers tipped using a dedicated team member for lead generation will be the best option, along with social media (also 51 per cent).
Some 42 per cent of advisers anticipate AI will be another successful tool for prospecting new clients as well.
Advisers are also focused on investment process as they look to grow their business, both to build stronger and confident relationships with their clients and also free up time to deliver better financial advice.
Model portfolios are an important option in the investment process as advisers look to grow their practice. 48 per cent of advisers reported that model portfolios improve the consistency of their investment process, and another half of advisers reported that transitioning their clients to model portfolios will help free up the time needed to deliver financial planning.
Almost two-thirds of advisers world-wide (62 per cent) believe model portfolios make it easier for them to implement rebalancing, tactical shifts and other portfolio changes across their entire client book.
Advisers across the globe must also manage their client’s investment expectations through a changing macro and market environment.
The top client questions found in the report were “am I protected from [an economic] downturn?” (72 per cent), “what do I need to do to outpace inflation” (67 per cent), and “am I going to meet my goals?” (64 per cent).
