Riding the wealth transfer wave

American Bankers Association, January 27, 2025, by Christopher Delporte

Gilded Age industrialist and philanthropist John D. Rockefeller said: “The only question with wealth is, what do you do with it?” It’s a question that has stood the test of time, but the answer certainly has evolved.

Eighty-four trillion dollars through 2045 is the oft-cited hefty sum of wealth transfer currently underway from baby boomers in the U.S. to younger generations. While Gex X, millennials and Gen Z may be on the receiving end of this historic wealth transfer wave, one thing is certain: These generations view and manage their financial matters much differently than the previous ones did.

Wealth management experts cite a mix of reasons for this. Generations on the receiving end of wealth from parents, grandparents and other benefactors — women inheritors and investors, in particular — approach investments much differently. For some, it could be due to their level of financial literacy or differing financial priorities, the desire to align investments with social goals and beliefs, or a lack of connection with or confidence in “traditional” or “old school” financial advisers. As this wealth shift takes place, banks and financial advisers have an opportunity to rethink how they approach, attract and work with these varied groups and their unique money needs.

According to a recent survey by Edward Jones with Next360 Partners and Morning Consult, nearly half of all Americans plan to leave an inheritance, and two-thirds of those planning to allocate funds plan to leave instructions on inheritance. But there is limited communication around what this direction means for the receiver, the survey authors noted.

The study also reported that intergenerational wealth is more than just the transfer of money for women, including an expression of core values such as security, freedom and well-being for themselves and their families. According to the study, 87 percent of women define the purpose of wealth as a way to obtain financial security and the freedom to live the life they want, and 85 percent view it as a means to a better quality of life.

“With people living longer, the wealth transfer conversation needs to be a dynamic, ongoing dialogue. ‘The talk’ must happen before ‘the transfer,’” says Joe Coughlin, senior adviser to Next360 Partners. “Our research found that there are a lot of assumptions about inheritance, but limited effort to clarify through a discussion. The talk is critical to manage family harmony, uncertainty and the financial complexity of passing wealth.”

That conversation, experts say, is something with which trained financial planners and banks can assist clients — but key to beginning a productive conversation is understanding the shifting wants and needs of different generations of investors (and the varied groups within them).

Be ready for different client dynamics

It’s no longer like the 1950s TV show Father Knows Best, with dad making the decisions for his family unit of a wife and three kids, explains Dave Coffaro, principal of the Strategic Advisory Consulting Group, which focuses on banks and registered investment advisory firms.

“If you’re working with a Gen Z or a millennial or a Gen X, or even baby boomers, you’re often dealing with a multigenerational relationship. It’s very common that somebody in their 40s or 50s today is taking care of children and possibly taking care of parents, or maybe even taking care of children, parents and grandchildren,” Coffaro says. “It starts to look a lot more like the show Modern Family in terms of multiple generations that may be culturally diverse but also diverse in a lot of different ways.”

Coffaro says that advisers need to focus on the client discovery process, understanding who the advice is for, who the client is, what the group makeup is, because it is not typically just one person — it’s a family or a group.

Kathleen Burns Kingsbury, principal at KBK Wealth Connection and a women and wealth consultant, money mindset coach, and author, says its about “meeting younger generations where they are.”

“Advisers should understand different generations’ pain points. Talking to Gen Z about retirement, for example, may not resonate,” Kingsbury says. “But if you talk to them about how to pay down their student debt or how to start saving for a house — wealth management advisers need to meet them with the issues that they are really worried about.” Kingsbury also notes that advisers should realize that younger generations may be getting their investment information online via TikTok, YouTube and social media. Part of the advisory approach is to figure out where they are getting their information and to make sure it’s accurate.

Understanding where people are sourcing their investment information is an opportunity for trained advisers to provide clarity, agrees Brandon Ghee, SVP at Florida-based Cogent Bank.

“There is still a significant gap of information in our educational system. Many young people rely on social media for news, which can sometimes offer valuable insights, but often favors quick, short-term investments with higher risks,” says Ghee, a former college football and NFL player who specializes in providing financial advice and education to young athletes and special talents. “This reliance can lead to fragmented understandings and risky decisions, as misinformation can thrive online. We want to work with the younger generation, so they are better educated on resources and capabilities to make their wealth last. By promoting deeper learning, we can empower young people to navigate information more effectively and make informed choices for their futures.”

Kate Healy, CEO and founder of AdvoKate IQ, a consultancy firm that helps wealth management create growth strategies taking advantage of demographic changes, says younger generations are ready for this level of investment interaction. Healy says Generations Y and Z look to financial professionals as coaches and accountability partners to help them meet their goals. “They are much more likely to want to be involved in the discussions and provide feedback around the process,” she says. “They welcome quick check-ins and are fine with texting and emails around specific situations. Almost two-thirds have begun investing since 2020.”

Coffaro notes that millennials are more tempted to go digital-first. Gen Z, however, will do their online research and then want to talk to a person and are more likely to go to a traditional bank for investment advice because it instills confidence with them.

Kingsbury says that younger generations are open to a more collaborative and open conversation about investment and inherited wealth, but there are still older beliefs about money conversations with which to contend. Baby boomers may have had a more “top-down” approach when it came to their investment advice, more content to be told what’s best by advisers, waiting for quarterly updates and portfolio reviews, and perpetuating the notion that discussion of money matters is rude and talk of inheritance plans could be impolite or insensitive

A recent Wells Fargo report found that roughly 26 percent of adult children would rather deal with their parents’ estate after they die than talk about it while they are living, and 19 percent said they don’t mind receiving nothing at all, as long as they don’t have that talk with their parents. But, encouragingly, according to a survey of “financial taboos” by TD Ameritrade cited by Kingsbury, 71 percent of millennials agreed that society would be healthier if people felt they could discuss personal finances more

Not your father’s wealth

One of the most important demographics in the wealth transfer and generational investment discussion is women. According to Kingsbury, recognizing the strategic advantage of empowering women in wealth management — as investors and advisers — continues to represent “untapped potential.” According to the Center for Women in Financial Services, 70 percent of the wealth transfers from baby boomers to their children will be inherited by women, and a 2023 report on women in wealth management by investment adviser consulting firm Carson says that nearly half of all women consider themselves to be the chief financial officer of their household. Research from McKinsey shows that there has been a 30 percent increase over the past five years of married women making financial household decisions, and that women will control $30 trillion in assets by the end of the decade, up from approximately $11 trillion today.

“When you look at so much of this wealth being controlled by women — and when you look at women in general — they want to work more with wealth advisers,” Kingsbury says. “They want to be financially educated. But despite the efforts that we’ve made, many women feel that the industry is not sensitive to their needs and doesn’t understand exactly what they’re interested in talking about.”

Advisers need to be trained in overarching gender differences, but Kingsbury cautioned against being “too stereotypical.” She noted that everybody is unique, and gender is “only one lens.” It’s about developing an inclusive approach. “It’s the human side of finance,” she says.

Advisers should understand and be prepared to help clients with important considerations at different parts of the financial journey. When do they expect to receive inherited assets? Because, ultimately, this conversation involves death and family or loved ones, what’s happening with clients emotionally? What is it like to inherit wealth? How are investments tied to their values, philanthropic issues and social perceptions?

“Women tend to be — and this is backed up by research — very values driven, and they want their money to give them freedom. They want their money to give them options to invest in their community. We need to provide a kind of a holistic experience for women who are receiving this wealth. I hate to say that women are less financially confident. I think women are more likely to say they’re less confident or admit what they don’t know. Men are more likely to fake it till they make it.”

Healy says women tend to prioritize long-term security and agrees that they look to support family and charitable organizations, embracing philanthropy. She says advisers need to be aware of other common considerations. “Women’s wealth is affected by a longer life expectancy, possible earnings breaks in their careers as they raised families, lower career earnings based on those breaks and the propensity to not negotiate for larger salaries, starting in their very first job, which can cost up to $500,000 over their career in lower benefits, 401(k) contributions and benefits attributed to that lower salary,” Healy explains. “Women also often inherit twice — once from their parents and again from a spouse.”

Another difference, according to Kingsbury is the transactional nature of how women and men traditionally approach the adviser relationship. “Men will often do some research, meet with an adviser, and then hire them. Women will meet with advisers. They’ll have conversations. They’ll talk to their friends. They’ll talk to their family and mull it around. They may go back and want another visit, and then eventually they’ll make a hiring decision,” she says. “Women tend to learn through conversation, through community and they tend to hire after more conversations. So, you have to invest a little bit more up front. But the good news is that often when women make buying decisions, especially around advisers, they are very loyal clients.”

Statistics support this. According to Carson’s women in wealth report, 70 percent of women change their advisers within a year of the death of their partner — most often because they weren’t part of choosing the adviser or involved in decision-making conversations.

Coffaro says he has experienced the same. “Let’s take a very stereotypical case where it’s the man who has the relationship with the wealth or financial adviser and he passes away. If that relationship has not been with the couple, odds are that you’re going to lose the business because you have not truly made it a relationship with the couple — getting input from both sides,” he says. “If you haven’t connected with both people, you miss the mark as an adviser.”

Kingsbury teaches advisers to look at other client components, in addition to gender, such as their race or sexual orientation. Maybe they were raised in a military home, or perhaps they lived in a particular part of the country, she suggests, with both potentially affecting their attitude toward money and investing. “We need to be thinking about women and our clients in general with a much more inclusive lens and think about their intersectionality. It’s a great opportunity for advisers.

“I would argue that if we look at millennials, Gen Z and others and a lot of the values they have, that I’m not sure it’s even a discussion about being ‘female friendly’ any longer,” Kingsbury says. “It may be more about making the wealth management industry increasingly human centric.

Opportunity for banks

As advisers embrace a more individualized and nuanced approach to investment and wealth transfer advice, experts say there’s an opening for banks to capitalize on clients’ varied needs.

“Financial institutions can enhance client relationships by becoming more engaged in their journeys, rather than focusing solely on immediate benefits,” Cogent’s Ghee says. “By taking the time to understand each client’s unique goals and needs, they can provide customized advice and services that align with clients’ long-term aspirations,” adding that his bank provides concierge-like service to understand clients’ unique financial needs and the importance of personal connections.

Coffaro says banks can find new and more engaging “client-first” ways to present information about investments, financial preparation and wealth transfer. “People need the information. They need the research. But it’s more about meeting what financial success means to your clients. I think the paradigm of showing clients everything you have to offer has to shift. Banks should rethink their model, their sales approach.”

Investment services at banks and financial services, Coffaro explains, are perhaps too commoditized.

“I was in a meeting recently with a guy from a bank and investment leader, and his comment was that 88 percent of all investment managers don’t beat the S&P 500,” he says. “What that’s telling you is most managers are not quite as good as the market, and there’s so much available today that commoditizes the investment arena. I don’t want to minimize the importance of choosing investments wisely. That is essential. What matters more, though, is how does this fit [with the individual investor]? What I often tell my clients is if you were to be great at one thing, it has to be discovery and understanding of who the client is, what matters to them, their situation, their future, their family dynamics.”

Kingsbury says the opportunity for banks exists at many levels, from basic intake information to broader product offerings.

One opportunity is external, she says, and it is “kind of basic.” Kingsbury suggests adding to a bank’s intake forms as part of the discovery process to better understand clients’ needs — where they may be currently and where they want to go. “I know there’s a lot on an intake form, but what if we were to ask [customers] if they have had wealth conversations. If so, with whom? If not, who would they like to have them with? Maybe we include a section about estate planning and information gathering,” she explains. “You could even have it more general. Do you have regular money conversations with your family? If so, what do you typically talk about? If not? What would you like to talk about? It’s just a way of normalizing that there’s a transactional aspect but also financial conversations we need to have.”

She says many bank customers “don’t know what they don’t know,” and may not realize that they should be having these conversations, because they have the “money talk taboo.” They also may not know that their bank or wealth manager can help them. Banks should be in a position to help educate clients with having “the money conversation” with family and other beneficiaries.

“As a financial institution, you’ve got to train your advisers to be able to follow through with that promise. It has to be a two-pronged approach, internal and external,” Kingsbury says. “Wouldn’t it be great if banks could do more creative marketing in these areas. Obviously with compliance in mind, more creative outreach and resources would speak to the next generation. We’ve seen some investment firms try this — campaigns around talking about money. They don’t call it wealth transfer, because most people in their everyday life don’t think in terms of wealth transfer. Banks could offer education through online resources, create blogs and guides. We need to educate our clients. We need to train our advisers. And I think if we built something into the discovery process or the annual review process, that that could make a huge difference in our clients’ financial planning.”