Over the next two decades, more than $100 trillion will change hands in the greatest wealth transfer in history. This is a massive opportunity for financial advisors, both new and established. This conversation provides detailed, research-backed information and practical advice for financial advisors who are considering their next move. Produced by Bloomberg Media Studios and Prudential Financial, this roundtable discussion provides clear and honest perspectives on the changes that are coming.
Welcome to "The Great Client Transfer."
If you're a financial advisor, I'm sure you've heard about
and thought about the great wealth transfer
This is an inflection point where there's a huge opportunity
to try to solidify a new generation of clients.
However, when the money moves,
there's a very good chance your clients will move too.
Demonstrating true understanding
of how this new generation thinks
about wealth and retirement will be essential.
Today, we'll discuss the data behind the wealth transfer
and how financial advisors can make the most of this moment.
I'm Maggie Lake, a financial journalist,
and I've heard experts opine on this issue for years,
but today I want to boil it down to some hard facts
and actionable ideas.
To do that, I've put together a fantastic panel.
We have Chelsea Ransom-Cooper, a financial advisor
with Zenith Wealth Partners, who's actively working
to retain current clients and attract new ones.
Brittney Castro, a financial planner,
will offer a behavioral finance
perspective for our conversation.
She's here to decode the why behind
a lot of client actions we've been seeing.
And we have David Blanchett,
the head of retirement research
for Prudential Financial and Portfolio Manager at PGIM.
So welcome everybody.
It's wonderful to have you here in person.
Thank you for having us. Yeah, great to be here.
This is a really important topic,
so I think we're going to have some fun and hopefully,
give some people some stuff to learn about.
David, Prudential has done a lot of research
on this great wealth transfer.
What's the research telling you?
I mean, it's a really big number, right?
According to our Cerulli report,
over $100 trillion that's estimated to be transferred
to generations in the next 25 years.
So I mean, we're talking about just this tremendous,
you know, opportunity and this risk because if you look at,
at people when they're asked, like,
"Are you going to stick with your parents' advisor?"
Only about 19-ish percent say they're going to stay
with their advisor, you know, going forward.
So I think that what this creates is just this question,
like, how are you preparing as an advisor
to meet this new possible demand?
That's a shockingly low number, I think.
I was not expecting to hear that.
Brittney you focus on the behavioral part of finance. Why?
Why is that number so low?
Why do people feel like they have to make a change?
Well, I think for so long they feel unheard,
or unseen by the financial advisor,
especially in this scenario where it's the next generation.
They probably are looking at that advisor as like,
no offense, but old dinosaur.
Like they're not talking to me in a way that makes sense.
They're not like relating to me where I'm at,
with my goals, with my different lifestyle.
I mean, planning is a lot different for millennials
and younger than it is for the baby boomer generation.
So if they're feeling unheard, unseen,
uncomfortable asking questions of the person
that they're supposed to hire as their professional,
of course they're going to leave.
Yeah. And find somebody
who is more relatable, who can help them where they're at,
help them feel empowered, not feel bad about the decisions
they've been making with their money up until that point.
And I find it surprising
because it's a big important thing.
It can be stressful.
So you would think continuity would be the easy path,
the path of least resistance.
But they're blowing it up and saying,
"I want something different. I want to find a change."
Are you seeing that?
Absolutely, I'm seeing it with a lot of the clients
that are even coming to us right now.
So I worked with a family
who was going through the similar situation.
And as they were planning for their wealth transfer
to their children, the children met that advisor.
And when they walked out of that meeting, they're like,
"This is not our guy. This is not our person."
It felt like a dinosaur, to Brittney's point.
And they wanted somebody that could actually understand
where they were coming from based
on where they were in their life as millennials.
So I think that's the element where they decided
to look for somebody on their own,
and then start to have family conversations
with this newer advisor, a.k.a. me,
instead of that traditional advisor.
This has to be a tough statistic for some to hear
because I certainly know when I talk to people
who work so hard trying to grow their net assets,
and have something to leave for the next generation,
they've worked so hard.
They want to protect their life's work,
and they want to make sure that it is able
to transfer in a seamless way.
But now we hear there's this big disruption.
So I think that for better or worse,
a lot of times when we're talking about portfolios
and financial advising, we're not focusing on households,
we're focusing on individuals,
and perceptions of what matters
really differ across men and women.
I think women are much more interested
in things like protection.
But if you look at surveys out there,
there's these huge gaps that exist in terms
of what advisors think they're doing for their clients,
and what people actually report.
According to an Alliance for Lifetime Income PRIP study,
62% of advisors think they're talking about protection
with their clients, when only 27% do.
And so I think, I think it requires being intentional
and understanding like where your strengths
and weaknesses are because if you don't have a plan,
to how to engage, you know, the spouse, the next generation,
like you're going to be part of that 80%, not the 20%.
And I've heard it so many times in my career where women
would leave the financial advisor after the husband died
or passed away because they didn't feel seen or heard
that entire relationship.
And so while the advisor thought it was a successful
relationship, the client immediately
when she had the chance, she left.
Chelsea, this is interesting
because you're on the front line on this.
Is it that the advisors are not talking about it,
or that the clients aren't hearing
everything they're saying?
I think it's a bit of both because I think as advisors,
we're taught a way on how to deliver advice,
and how to have conversations with individuals
to make sure that we're, you know, dotting all our Is
and crossing our T's when it comes to retirement planning,
estate planning and protection.
But if they're not receiving it,
because they are just not prepared for that conversation
or they're not ready, well then we're missing each other.
And I think that's something pretty common
where we're doing something because we know
this is important to have this conversation,
but maybe they're not ready to receive it yet.
It's a huge problem.
And I think for financial advisors,
when they start to realize the value that they bring
to clients is more about helping that client make decisions,
helping them feel empowered with their money, excited,
confident versus putting the data in front of them.
They'll say everything in one meeting, go over cashflow,
tax planning, retirement planning,
estate planning, all of it.
But it is so much information.
And remember, money is emotional.
So what I retain in a meeting,
even if you've told me everything,
I'm filtering through my own history,
my own emotions, behaviors, mindsets with money.
So maybe I walk out of that meeting only hearing 10%
of what Chelsea told me.
That's a problem.
So what advisors can do to help combat that
is also just deliver it in short forms.
So we have to remember that as financial advisors,
give clients information in bite-sized pieces,
have more meetings more regularly,
talk about only one or two things at each meeting.
That's going to help the client so much more
than trying to dump everything in one meeting.
Right, so I mean, I'm an investment guy.
I love me a good portfolio.
But a portfolio is one very small component
of achieving a financial goal.
And I think what we're seeing is this evolution
in our profession away from advisors defining
their value proposition as "I build portfolios"
to "I help you accomplish your financial goals."
And that's retirement, that's everything.
And to me, like that should have always been the focus,
but it hasn't been.
And it does require advisors to think about
how are they going to rise to the occasion and do this.
How do you see that? How do you deal with that?
I absolutely see it, especially as I'm training,
the newer advisors on our team as well,
because there's so much pride
when you build that financial plan, right?
And you have all your pages and you know all the math works
and you show it to them,
and the client is just not as excited as you are.
And it's like, why are they not as excited?
It's like they're not emotionally connected
to all of this data you're putting in front of them.
So you have to find a way to tie it to their values
and what's important to them.
But I also encourage advisors
to ask two really important questions.
The first one is what does wealth mean to you?
So when they talk to a new client,
and they're starting to build that rapport,
really understand, you know, their relationship with money,
and what wealth truly means to them.
But also what does financial success
look like in having a relationship with a financial advisor?
And I think financial advisors have to be willing
to go to that place with clients,
which is more emotional intelligence versus just data.
And so even having that open mindset, like David's saying,
there's things you could do.
You can learn skills to talk to your clients
in a different format.
Like there's financial coaches,
or bring in a financial coach
if you don't know how to have these conversations.
But being that holistic, you know,
it's more than just numbers, it's their life,
it's their dreams, it's their family,
it's like what they care about most,
and like Chelsea was saying, and when you connect those two,
they're going to be so much more motivated
to one, implement, but then two, sing your praises, and
you'll probably get a lot more referrals.
And that story may be different than the original client.
We talk about gaps.
According to the Alliance for Lifetime Income PRIP Report,
70% of advisors say they frequently discuss
how their clients are going
to spend their time in retirement,
but clients report only 29% have those conversations, right?
So like, I mean, retirement's about a lot more than money.
And I think if you're not talking about
like how you're going to fill your time,
how you're going to structure
what you have to maximize that time,
you're not doing the best job you could.
And I think it's a hard conversation
for a lot of individuals to have to really think about
that behavioral component of "what are you going to do
in retirement
and what's next?"
And I think sometimes clients are so eager to work
towards that goal where they can, you know,
get out of that nine to five or quit the corporate rat race
that they're not actually thinking about
what are they going to do in that time
so they still feel fulfilled
in all the other elements of their life.
But I think those are the core pieces that we need to focus
on to make sure that their values are mapped
to their financial plan in that roadmap.
I don't love the word "retirement,"
because I think it has negative baggage.
Me too. I like the word
"financial independence."
You know, like think about
if you were to be financially independent,
like how would you spend your time?
Like I like that question more because I just like,
maybe it's just me,
but I have like people golfing or going on.
I don't know that like — imagine
when you don't have to work, what would you do?
I think that's a better way to think about
the end of life stage versus quote unquote "retirement."
I think that's also a great point too
for financial advisors to start to pay attention
to the language they're using with clients because I agree,
the next gen millennials and below
are not thinking about retirement.
We're thinking about, well, let's find something
that we enjoy that we can have financial independence, yes.
But even the idea of stopping working
seems kind of very odd.
And that's exactly what a lot of my clients talk about
because they are first generation wealth builders,
and the term they'll use is a "work-optional" lifestyle.
Yeah. Where they're working
for their passion because they choose to,
and not because they feel obligated to.
And that's really the number that they're working towards
is where they have that peace
and that flexibility in their life.
David, the other thing that Prudential's research
has touched on is a confidence gap.
What do you mean by that? What does that mean?
Yeah I mean, you could call it a gap or a paradox.
(all laughing)
You know there's just like people don't always
have the best assessment of where they are financially,
what they should be doing.
There are large gaps in what you'd call like subjective
and objective knowledge when it comes to finances.
According to Prudential's latest pulse survey,
about 90% of mass affluent Americans
think that they're on track to cover
their essential expenses in retirement.
But only about 40% of people have an advisor,
only about a third have a financial plan.
So there's kind of this misalignment from where folks
think that they're in a really good spot,
but the data might suggest otherwise.
Brittney, can you help us make sense of that?
Why, how can you be confident,
and have no plan at the same time?
Those two things seem like they would be polar opposites.
I think a lot of people have this with their money.
They might know what to do.
They might think they know what to do.
They might research everything what to do,
but they don't actually do it.
And that is for many reasons.
I think money, like I said earlier,
is super emotional for people.
So there's a lot of concepts, a lot of mindsets,
a lot of scripts that we inherit from parents,
from families, society, school.
And to really get clear that yes,
you can have a crystal clear plan in place,
but that doesn't mean you're actually going to implement,
or behave in that manner with your money.
So oftentimes when I work with clients,
sometimes they'll come to us because they feel obligated,
because this is the thing to do.
I know I should talk about my finances.
I know I should have an advisor.
But deep in their soul, they're really not at that place yet
where they're ready to do the work,
or actually engage in like taking care of their finances.
And that is okay, but maybe that's not their moment yet.
But it's really hard to work with somebody
if they haven't reached that phase,
and they know what their internal "why" is.
So I think there's an element of as advisors,
we need to do the work to make sure that we're bringing
the knowledge and the empathy to the table.
But I think clients also need to internally know
their "why" too of what they're building,
why they're building towards these goals
so that it can really be a really good partnership.
You know, I think what we often overlook
is that like we've kind of solved inertia
for people in accumulation where now we have defaults,
you know, we're talking about behavioral finance,
like, you know, automatic enrollment, default savings rates,
you know, target date funds, all these things
make the default path the easiest.
As you get closer to retirement,
like you have to start making decisions.
Yes. Right.
And so I think like that's where advisors are so valuable
because like you can't not make decisions,
or you'll make the wrong ones.
And so all of a sudden, you know, like this knowledge gap,
well like we're kind of creating an environment
where you don't have to be very knowledgeable
to build wealth, but then how do you then figure out
how to deccumulate that?
That's an entirely different skillset.
I actually was talking to a client recently
where they're about two years out from retirement,
and just the thought of pulling money out of that account
where they worked so hard to see it grow every single year.
And now the element that we are pulling money out
so that they can live off of, it was a tough conversation.
We had to have an in-depth meeting about like that feeling
and why there is so much hesitation
around this when we had run the plan
and the analysis that they were okay.
So I think those are the elements
of having somebody in your corner.
It's just so important, the work that we do as advisors.
They need more help than they often realize.
So what should financial advisors
be thinking about doing next week?
How can they make the change?
What do those changes look like?
One: Have an open mindset.
I think learning is something that you have to constantly
be willing to do no matter what age you are.
And that's just because of the world
we live in with technology, AI.
It's constantly changing things.
So we all have to have that open beginner's mindset.
And for a financial advisor, if they go next week,
look at their practice,
look at how they're communicating currently
with their ideal clientele, maybe start to identify,
are there just terminology gaps?
Like instead of saying retirement,
should we start saying "financial independence," you know,
in our marketing and in our meetings with clients?
I think these are the elements
where if we're missing people consistently,
they're looking for somebody that is using the same language
that they're using, but understands the trajectory
that they're trying to go and can meet them on that path.
So you have an audience of financial advisors listening.
Some are earlier in their career,
some have a very well established book of business,
with well-heeled clients.
What should they know?
You know, so if you look at surveys of financial advisors
in terms of, you know, threats that they perceive
or challenges, client acquisition is first,
followed by intergenerational transfers.
And so they're kind of acutely aware
that they need to get more business,
and they need to retain the business they've got.
If you've built a business doing something
for a certain subset, I think there's a really good chance
that might work for a few more years.
But to be long-term durable,
you have to be able to meet with the next generation.
You got to have different paths to offer services.
I think that requires like a team model,
and just doing more than what we've seen.
I think there's been a really exciting evolution
of our industry over the last at least two decades
in terms of being more holistic, more advice.
I think that has to continue.
And it's easier more now than ever given the tools
we're seeing being created.
Yeah, I heard you say yes. Absolutely.
Emphatically. Yes.
(all laughing)
And I think the team-based approach is so crucial,
because we can't be everything to everyone,
and that's naive to assume that.
But we want to make sure that we're able to add
the right people on our team to make sure
that we can connect with different individuals.
So I always say, you know, trust is earned,
and it's not just your credentials
or the performance you're able to get a client,
but it's really being there in those moments,
and having people on your team that can connect
with other members of their family or different groups
that you just may not be able to connect with.
I mean, I think it's important to just acknowledge
where you are on that spectrum, right?
If you've got a bunch of younger clients,
like you should be in attack mode, right?
You should build the infrastructure to engage
the next generation to get these clients
as they gain wealth.
If you have an older, larger book of business,
how are you actively protecting it?
What are you doing to make connections to the spouses,
to the next generation, to ensure that, you know,
when things happen, you're positioned
to actually maintain those assets?
To bring it all together,
the world that financial advisors
work in is changing in a couple of key ways.
The people who will be their clients in five years,
probably aren't their clients today.
They need to be ready and receptive to this new group
of investors and this new cohort wants an advisor
that's available, empathetic, and adaptable.
If that describes you and your firm,
then you're in good shape moving forward.
Thank you to David, Brittney, and Chelsea
for being with me today.
Thank you to Bloomberg Media Studios, and Prudential,
for producing and sponsoring this episode.
I'm Maggie Lake.
Thanks so much for joining us.
FAQ
Only about 19% say they expect to remain with their parents’ advisor, suggesting that most inherited assets may be at risk of moving to another firm.
There is a significant perception gap: 70% of advisors say they frequently discuss how clients will spend their time in retirement, but only 29% of clients recall those conversations.
Only about 40% have a financial advisor, despite roughly 90% believing they are financially prepared for their essential retirement expenses.