The AI Advantage To Bridge Gaps In The Great Wealth Transfer

How AI Can Assist Advisors In Meeting The Needs, Requirements And Habits Of Inheriting Generations

The “great wealth transfer,” a phrase coined by Boston College researchers in the 1990s, is officially underway. An estimated $84 trillion worth of assets in the U.S. is projected to transfer to the next generation by 2045, and in Canada, CA$1 trillion is expected to pass to heirs by 2026. This monumental transition of wealth presents a unique set of challenges and opportunities for financial advisors.

One significant issue for advisors is that the heirs remain largely unprepared to handle the wealth. In the 2023 New York Life Wealth Watch Survey, only 42% of respondents felt very comfortable in managing newfound wealth. Compounding this predicament, younger generations have stronger, more distinct values and beliefs regarding their finances, but often lack a relationship with the advisors managing the assets they will inherit.

More than 70% of heirs are likely to seek new advisory services after inheriting wealth.

Further, it’s estimated that advisors have reached out to approximately 13% of their clients’ adult children, an astonishingly low figure given the enormity of wealth set to change hands. Consequently, more than 70% of heirs are likely to seek new advisory services after inheriting wealth – disheartening news for legacy advisors.

To navigate the complexities of the great wealth transfer and meet the evolving demands of younger generations, advisors are leveraging AI with a goal of offering a client experience distinctly different from what previous generations knew.

AI For Outreach And Literacy

Time constraints on advisors

Advisors face a significant time constraint as they attempt to serve their current clients while also addressing the needs of younger heirs. AI-based solutions simplify outreach by automating communication, making it easier for advisors to engage clients of all ages with content and educational materials that resonate with them.

Moreover, platforms using AI often excel at digital data gathering, which allows advisors to gain comprehensive insights into their clients’ financial situations quickly and accurately. These systems should be trained and vetted to facilitate compliance with rules, regulations and strategic approaches, offering accurate and impartial advice while maintaining personalization.

Understanding Younger Generations’ Behavior

AI caters to the behavioral patterns of younger clients – enabling effective, generationally relevant communication of investment strategies, potential outcomes and associated tax and inheritance implications.

Younger generations exhibit a “validator” mindset, which means they research and compare various approaches before making decisions. By using AI to facilitate an educational narrative around wealth management, advisors align their services with the methodical and inquisitive approach that younger generations take in financial decisions.

AI assists advisors in addressing heirs who feel unprepared or uncomfortable discussing financial matters with their parents or their parents’ advisor.

AI also assists advisors in addressing unique family circumstances – particularly heirs who feel unprepared or uncomfortable discussing financial matters with their parents or their parents’ advisor – by analyzing unique financial circumstances to identify discussion points that facilitate these conversations. With these salient talking points, advisors are better able to position themselves as trusted partners and bolster cross-generational relationships.

Personalization In Practice

AI also helps advisors address the diverse investment perspectives and risk appetites of younger generations by translating their views into investment strategies that make sense for their unique financial situations, individual values and goals. This bespoke approach to financial advice initiates vital, intergenerational conversations that are not just about wealth, but about values, impact and legacy.

Ken Lotocki is Chief Product Officer and Co-Founder of Conquest Planning, a technology platform that leverages AI to help advisors build financial plans

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