Following the Largest UHNW Wealth Shift in History

 

Over the next 30 years, the world will see the largest shift of UHNW wealth in history. According to the recently released Family Wealth Transfers Report from NFP and Wealth-X, ultra-high net worth individuals in the U.S. will shift $6 trillion to the next generation over the next 30 years, accounting for almost 40% of the global $16 trillion. And while financial advisers who boast decades-long relationships with current wealth holders will orchestrate the initial shift, where members of the next generation place their trust is not certain. If you are one of these clandestine advisers, how should you be getting ready now for the great wealth transfer? By following the first commandment of marketing.

Know thy customer.

The current generation of UHNWIs, in many cases the first in the family, are often self-starters, making their children the first to grow up surrounded by wealth and opportunity. While today’s ultra wealthy have learned, through necessity, to spend conservatively and invest, their offspring enjoy a more lavish lifestyle. That isn’t to say that they don’t wish to invest or consult with advisers, but it does bring to mind a phrase that we’ve all heard (or said) before, UHNW or no: “I am not my parents.”

And it’s an attitude that extends beyond investing and planning habits. First-generation wealth might find that the businesses they built from the ground up do not interest their children, who wish to strike out on their own or explore other interests. Beyond the geographical challenges these interests create, there is also a changing communication preference. Social media usage is growing among millennial UHNWIs, and an increasing percentage of the wealthy are utilizing tools like LinkedIn and YouTube for personal and educational purposes. While in-person financial planning will likely never disappear, the times are undoubtedly changing. Are you keeping stride? More importantly, are you keeping your future clients satisfied?

As this historical UHNW wealth shift gains momentum, financial advisers must be careful to:

  • Preserve the values of their first-generation UHNW clients without alienating their children.
  • Protect the wealth grown by first-generation business owners without forcing their children into the same roles.
  • Maintain communication with everyone involved in the transfer through a combination of face-to-face interactions, digital exchanges, and a dedicated social media presence.

Begin exploring these strategies now. Start solidifying your relationships with your UHNW clients and their families. Recommend they initiate conversations with their loved ones about financial planning and provide them with the tools to do it.

Given this to-do list, following the UHNW wealth shift might sound like a daunting task. And it is. But at least you have a 30-year head start.

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