Get ready for The Great Wealth Transfer as boomers begin to shift funds to heirs

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Between 2023 and 2045, $84 trillion in assets will be handed down from baby boomers to their heirs or charities according to market research firm Cerulli and Associates.

The Rochester Business Journal asked four leaders in the wealth management space how they’ve readied their firms and their clients for what’s been dubbed the Great Wealth Transfer.

Heather Goodbody, CEPA, senior vice president and private wealth advisor at Goodbody & Associates Merrill Private Wealth, views the Great Wealth Transfer not so much as a watershed moment, but an extended period of sharing of knowledge for all parties involved.

“The dialogue that I’ve had with clients for my entire career has always been about preparation,” Goodbody said. “Preparation not only for the next generation in terms of what their financial responsibilities may be and their social responsibility from a philanthropic perspective, but also preparation for the matriarch and patriarch.”

This preparation for Baby Boomer clients (born between 1946 and 1964) includes when and how to have conversations with their millennial (born between 1981 and 1996) and Generation X (born between 1965 and 1980) heirs about wealth transfer and preparation for the heirs on how to manage these new sums of wealth.

“One of the things our firm excels at is providing boot camp opportunities for our next-generation clients,” Goodbody said. “These boot camp opportunities can be three to four days long in various cities across the U. S. and we’re able to bring in a group of young next-generation clients who are looking to be responsible with their family wealth in the future.”

These retreats are sometimes done with a single family and other times larger groups. In addition, Goodbody and her team also enjoy getting to know their clients’ children and grandchildren from an early age and providing foundational financial education when they are pre-teens and teens.

Recent research from Nuveen, a TIAA Company, shows that 80% of wealth inheritors who meet their parents’ or grandparents’ advisors during their childhood or teen years tend to stay with them, which underscores the importance of multi-generational planning and education for firms.

Elizabeth Thorley, CFP, founder and CEO of Thorley Wealth Management, Inc. — an independently owned and operated financial advisory firm in Pittsford, says when it comes to the Great Wealth Transfer it’s important to understand and respect the differences between generations.

“Today there’s a much greater demand for comprehensive financial education,” Thorley said. “What research has garnered is that the younger generation is really interested in holistic planning and incorporating their values into their investments.”

Thorley says the younger generations also seem more interested in the Financial Independence Retire Early (FIRE) movement, in which devotees save and invest aggressively when they’re young so they can retire earlier — sometimes by decades — than their parents or grandparents.

“It is a popular idea with a lot of the young generation who want that life-work balance,” Thorley said. “This isn’t something that we used to see very often with the baby boomers. The planning environment changes because of it.”

Thorley and her team see these generational shifts as exciting and opportunity-filled. This is a mindset that can be important for firms since only about 70% of heirs stick with the same financial advisory firm as their parents upon inheriting wealth, according to Cerulli and Associates.

Lori Van Dusen, CIMA, and founder and CEO of Pittsford-based LVW Advisors, says another key factor for firms to keep in mind with the Great Wealth Transfer is the importance of technology-based tools to the younger generations.

“If you’re not going towards a digital experience you’re not going to engage that younger generation,” said Van Dusen, who notes it’s not only about offering the technology tools younger clients typically prefer (like texting and apps) but going a step further and providing digital content and a “cadence of communication” that is relevant and helpful.

Van Dusen also places great value on what she calls a next-generation team – financial advisors within the firm who are closer in age to clients’ children and grandchildren. This age matching helps heirs establish their own relationships within the firm with professionals who most likely have more relatable experiences.

“When you’ve accumulated wealth that’s outlasted you, your advisory team should be multi-generational too,” Van Dusen said. “Learning what’s important to heirs and meeting them where they’re at is so important.”

The average age for financial advisors in the United States is fifty-seven, according to a 2022 study by J.D. Power., which puts them in the baby boom generation.

Van Dusen also stresses the importance of getting to know heirs when they’re younger so they can learn basic financial planning to help them steward their family’s wealth.

In preparing advisors for the Great Wealth Transfer, “Ameriprise supports the ongoing training and advancement of its advisors to serve the multigeneration needs of our clients,” says Nannette Nocon, CFP, and private wealth advisor at Nocon & Associates, a Rochester-based private wealth advisory practice of Ameriprise Financial Services LLC.

This training and advancement include both technology and humanistic pieces, like behavioral finance coursework that helps advisors better understand and manage the emotional pieces that can come with wealth transfer for clients.

“Administratively we are continuously confirming account ownership and beneficiary designations are aligned with the estate plan,” Nocon said. “With the current housing and mortgage rates, several clients have a desire to help their children afford to buy a house. Since we have been a society of tax deferral, helping clients with strategies to reduce the tax impact of gifting by planning ahead is important.”

Nocon and her staff also educate clients on the tax and estate planning benefits of funding 529 plans for grandchildren and ensure financial plans for all generations are solid.

“As always, having a sound financial plan is a good foundation for having the most appropriate solutions for each generation,” Nocon said.

Caurie Putnam is a Rochester-area freelance writer.