With the pending intergenerational wealth transfer, financial advisors are transforming their investor engagement practices. The opportunity is enormous: in Canada, $1 trillion is set to move from Canadian baby boomers to their gen-X and millennial heirs during the decade ending in 2026, ISS Market Intelligence forecasts. In the U.S., US$84 trillion in assets is set to change hands over the next 20 years, according to Cerulli Associates.
Of those expected to inherit assets over the next decade, more than one-third anticipate receiving at least $500,000, and over half plan to invest those assets. As assets are passed to what is predicted to be the wealthiest generation in history, younger investors will become more financially savvy, and our industry must adapt, as traditional investor interactions risk alienating this group.
Engaging young investors through digital channels is critical. Most investors under the age of 35 (95%) would use social media channels to choose and interact with an advisor if available. Just 13% of investors over 65 favour social channels to interact with their advisors. This research by Absolute Engagement Inc. highlights the massive gap in channel choice between these two generations. Social strategies include building a presence on relevant channels (LinkedIn, X, TikTok), collaborating with influencers and thought leaders, and developing content that educates and engages these young investors.
A significant portion of this “receiving” generation has developed expectations that technology will work quickly (24%). These digital natives tend to be impatient with technology that doesn’t meet their high standards. Advisors who plan to cater to this group should have apps that deliver financial planning, portfolio reporting, and stage-relevant education. Apps must be mobile-friendly and deliver real-time data to meet high digital expectations. Many robo-advice platforms have pivoted to a B2B strategy, supporting firms and advisors with a fully online experience as an on-ramp for younger, less sophisticated investors. Technology leaders must focus on tech that offers fast and easy access, simplicity, high visual content and — last but not least — a fun experience.
Despite the size of the pending intergenerational wealth transfer, many investors in this generation, particularly gen Z, are stressed about their finances. According to a Deloitte gen-Z and millennial investor survey, top drivers of that stress are these investors’ day-to-day finances as well as their longer-term financial futures. As a result, they tend to be more conservative and debt-conscious than their parents.
While these investors are younger, they are fast learners, able to scale up the personal finance learning curve using online research. This generation is also much more purpose-driven. Advisors who successfully cater to this segment offer customized financial and estate planning focused on overall financial wellness.
While the industry is heavily focused on this massive opportunity, there remains a significant gap between strategy and implementation. According to Cerulli, fewer than one in five young investors will use their parent’s advisor because the advisor isn’t engaging them on their terms. A technology-focused strategy has the potential to improve these metrics, retaining young investors and capitalizing on this massive intergenerational asset transfer.
David Reeve is CEO of InvestorCOM Inc., a compliance technology provider to the wealth management industry.