Significant Baby Boomer wealth is starting to be transferred to children and grandchildren.
Consultancy company Cerulli suggests that boomers will transfer around $72.6 trillion in assets to their heirs by 2045 in the US alone.
This presents an opportunity for wealth managers to build and retain relationships over the generations. But it also presents challenges in navigating those relationships. For the most part, different generations have quite different views on money and investment goals and priorities.
Wealth managers must balance retaining client trust – with the parent – while building new relationships with children and grandchildren. To do this successfully, they need to develop a new set of skills that aren’t traditionally associated with finance and wealth managers.
Any conversation about the future involves some form of uncertainty. You don’t need to be highly skilled to appreciate that asking tough questions – like “what do you want to happen to your money when you die?”, or “who is handling your kids’ finances?” – put people on the defensive, trigger negative feelings, and ultimately cause a client relationship to fail.
The answers to these questions, however, are critical to successful wealth management, and getting to that point needs skillful communication, trust and a strong rapport. It is these qualities, and not just financial expertise, that will benefit wealth managers – and their clients – the most.
This means wealth managers need new active listening, diplomacy, and negotiation skills. They must use empathy over scare or shock tactics, and fear-based selling. They must avoid clients feeling manipulated into buying a particular product or service.
Traditionally, wealth managers have depended on data-oriented and analytical skills. But by focusing everything on the financial side of things, advisors can easily miss opportunities to have deeper – and potentially more rewarding – conversations about goals and aspirations. Mastering softer communication skills allows advisors to unravel statements like “I want my family to remain wealthy,” so they discover what that truly looks like for them – and their families – in both financial and practical terms.
It’s the advisor’s job to ask clients questions about money, but if they come across as self-serving, it can quickly damage the relationship. For example, questions which “tick the boxes” for regulation or the institution, for example qualifying clients for certain products, can make the client feel objectified – and at worst, may look unethical.
Instead, advisors should question from a place of genuine curiosity to really get to know their clients, their stories, their financial hopes as well as their families’. The sell, when it happens, can form a more natural part of the process, which the client is far more engaged in.
While some of these skills sound like common sense, they are difficult for most people to do consistently and convincingly. When sales targets loom and there are back-to-back client meetings, it’s natural for anyone – even wealth advisors – to focus on getting to the solution quickly.
The right training can help advisors balance these pressures with the imperative to build client trust and rapport.
Learning and development teams can ensure wealth advisors are equipped with the skills to negotiate conversations across generations, which ultimately benefit both sides. As the Baby Boomer wealth transfer gets underway, wealth managers – and their L&D teams – must seize this once-in-a-generation opportunity.
Download and read our new whitepaper, “The Art of Balancing Generations” for more on managing intergenerational relationships for the long term. Or, contact us to discuss how we can help your team achieve more effective communication skills.
An article by Rob Conlon, Global Head of Leadership
13/09/2023
