According to a new report, financial advisers could have a role to play in helping transfer just over $84 trillion in wealth over the next two decades, potentially securing a lucrative pipeline of young clients.
By 2045, baby boomers and the silent generation are expected to pass on $84.4 trillion, Ceruli Associates says in his new report.
Of that total, $11.9 trillion goes to charities while the remaining $72.6 trillion goes to heirs, according to the report.
Advisors working with the 1.5% of all households that make up the high net worth and ultra-high net worth segment will see much of this money, as $35.8 trillion, or 42% of the total, is expected to be transferred through this demographic group. , says the research firm.
Baby boomers, meanwhile, hold more wealth than their older counterparts: While the silent generation is expected to transfer $15.8 trillion, younger baby boomers are expected to transfer $53 trillion, according to the report.
The financial advisors who will benefit the most from the upcoming transfer are those who can offer complex wealth planning and planning strategies that also address tax concerns, Cerulli said.
The company found that grantor trusts are considered the best way to improve the tax efficiency of wealth transfers by 77% of HNW practices, followed by support for education, selected by 59% of respondents, and organized estate planning, selected by 31%.
Cerulli also suggests incorporating “family events” as part of the consultative process.
“Expanding inter-family relationships to involve all stakeholders rather than just the current controllers of this wealth will create a greater sense of responsibility and inclusion among heirs, which will help in the likely event that more discussions family wealth management issues will occur in the future,” Chayce Horton, an analyst at Cerulli, said in a statement.
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