A recent report from Bank of America —The 2024 Study of Wealthy Americans— provides keen insights into high-net-worth individuals’ evolving priorities and sometimes stark differences across generations. The takeaways? To succeed in this time of rapid change, wealth managers need to bridge the gap between generations, tailoring their offerings to resonate with both young and older clients. By aligning offerings with these trends, wealth managers can enhance client relationships, retain assets across generations, and grow their practice.
Here are three actionable strategies to help wealth managers stay competitive in this new era and build long-term business success.
Prioritize Multi-Generational Strategies
We are all acutely aware of the monumental wealth transfer that’s currently underway, with around $84 trillion changing hands from the current older generation to their heirs in the next two decades. By focusing on multi-generational strategies, advisors can foster engagement and cultivate relationships with younger clients, paving the way for long-term success and sustainability.
Engage the next generation early – through education and family-focused advisory services. Instead of the old closed-door meetings with family elders, include younger family members in wealth-planning discussions. These open discussions are not happening nearly as much as they should, according to Scott Smith, research director at Cerulli; “there’s all kinds of rationales that go into bequests, and if it’s not discussed beforehand, it could create conflict and undermine the attempt to create a legacy.” Proactive planning and early engagement not only help the younger family members understand the wealth they may be inheriting and how to manage it, but it’ll also help build lasting relationships with the next generation.
Diversify! Offer Diversified Investment Options, Including Digital Assets
Diversification, it’s not just a buzzword anymore. It really is a necessity. Younger investors are increasingly driving demand for alternatives like crypto, hedge funds, and private equity. They’re also skeptical about transitional investments, especially when compared to older investors—in fact, three-quarters of younger people agree that it’s no longer possible to achieve above-average returns with stocks and bonds alone. To stay competitive and attract the next generation, wealth managers must broaden their portfolios to meet these shifting preferences. The need for diversification is not just a trend, but a strategic move to engage and retain a diverse client base.
While younger investors are driving demand for alternative investments, they must also be well-informed. Given the volatility and high-risk / high-reward nature of crypto and other alternatives, advisors have an opportunity to educate investors to build trust and position themselves as knowledgeable guides. By staying ahead of these trends, advisors can better meet the next generation’s appetite for diverse, tech-driven financial opportunities.
Focus on Personalized Philanthropic and Estate Planning
Wealthy individuals across generations prioritize family philanthropy. That said, younger generations take a different approach to giving than their elders.
Advisors should know that younger generations strongly desire to actively engage with their philanthropy. In fact, young investors are twice as likely as Boomers to say that they would like to work with a financial advisor who helps them with their charitable giving goals.
They want to give, but they also want to oversee how their contributions are used and look for accountability from the groups they support. Advisors can help younger clients establish metrics for evaluating their charitable contribution’s effectiveness, fostering a sense of accountability and transparency in the giving process.
The best thing wealth managers can do is to tailor philanthropic advice to accommodate these generational differences, ensuring that both younger and older investors feel understood and supported in their philanthropic endeavors.
In a rapidly evolving wealth landscape, the key to success is understanding and adapting to generational differences. Embracing multi-generational strategies, diversifying investment options, and personalizing philanthropic guidance allows wealth managers to create meaningful connections that bridge the gap between young and older clients. The future of wealth management is not just about preserving assets—it’s about fostering trust and guiding clients through their unique financial journeys.
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