“This Great Wealth Transfer is about to kick into a higher gear. As much as $68 trillion will change hands between various generations over the next 25 years, according to Cerulli Associates,” says Andrew Osterland of CNBC
Most studies suggest that 80% or more of heirs will look for a new financial advisor after inheriting their parents’ wealth. You may ask why? There will be many reasons, but so often traditional advisers are focused on assets under management. You only need to look at wealth management firms. Schroders, SJP, Brewins etc. All the rhetoric is about managing investments in equities bonds and property (in the main). There is also more information becoming available that shows these same wealth managers are not outperforming. Yes, they all have some funds that outperform from time to time, but a portfolio that consistently outperforms on a risk-adjusted basis, you need luck to find. Many existing investors don’t change existing advisers and they have developed an emotional attachment to their advisers and even when they know it makes sense to change, it can be difficult to do. No one wants to ‘just out of the frying pan into the fire’.
However, the younger generation do not have relationships. Which means they can look more logically at the best outcomes. It is no surprise that 80% will sack existing advisers.