Years of focus by financial advisors on retaining younger clients amid the so-called great wealth transfer have not yet borne fruit among that up-and-coming cohort, according to two surveys released by outside observers.
One survey released Thursday by global market research and consulting firm The Harris Poll found that 43% of the heirs of high-net-worth Americans aged 55 or older plan to switch financial advisors after receiving an inheritance, even if they generally like the advisor. About 15% are unsure of what they’ll do, and 42% plan to stay with the current advisor.
The results were similar in a separate report by research and consultancy Cerulli Associates. Among affluent investors expecting an inheritance or who have already received one, 52% do not plan to keep their benefactor’s advisor, while the other 48% plan to keep them. And even among that 48%, “there is a risk this relationship could be short-lived once the transfer of wealth is completed,” Cerulli points out.
The findings are yet another wake-up call to an industry that has been focused on wealth transfer for years, with the subject appearing in countless conference agendas and white papers. According to Harris and Cerulli, the reasons for their potential departures vary, but there’s no question that advisors to the first generation cannot rest on their relationship with the benefactors.
“Findings show that Gen Zers and millennials will not continue the family/advisor relationship, simply out of loyalty or even if a huge inheritance was attained,” according to Jennifer Musil, president of research at Harris. “For younger heirs, even when satisfied with their parents’ financial providers, 43% still plan to end that relationship and find their own advisor.”
Harris cites Cerulli in forecasting a wealth transfer of $124 trillion from grandparents and parents over the next 25 years. The polling firm worked with one cohort of Americans aged 55 and older with at least $1 million in investable assets, and another aged 18 to 54 who expect to inherit at least $500,000.
Among that younger cohort, the reasons for wanting to leave their benefactor’s financial advisor range from what they see as outdated investment styles to flat-out poor service.
The top reasons for wanting to leave are not having a similar investment philosophy (38%), values not aligning (33%), not trusting them to make the best decisions for the assets (26%), not knowing them personally (26%) and lacking integrity and trustworthiness (25%).
According to the pollsters, some of those values include a financial advisor prioritizing ESG and “impact” investing. But more than that, younger investors are seeking higher rates of digital and transactional services compared to hands-on, human-to-human interactions. Harris found that only 5% of the older generation expect digital interaction from advisors, while 17% of the younger set do. Meanwhile, the desire for collaborative and hands-on services was lower for younger investors, with transactional and advisory services ranking higher than those of the older generation.
“Traditional providers will need to pivot their strategies to engage the next generation, as this transfer creates an opening for new banking models to steal market share,” Musil said.
In its report, Cerulli stressed that time is of the essence for financial advisors who hope to keep working with their clients’ beneficiaries.
John McKenna, a research analyst with the firm, commented in the report that the initial advisor has an early mover advantage in establishing a relationship. Still, time is of the essence when making an impression.
“The window of opportunity for advisors to potentially extend their client relationship to the next generation is brief,” McKenna said. “Among those who expect to receive an inheritance, 27% say they would maintain an existing relationship with the managing advisor, but this drops to 20% among those who already have received an inheritance.”
When it comes to forward planning, 48% of heirs said they would combine the inheritance with existing accounts, and 23% said they would open a new account elsewhere.
The survey considered affluent investors with at least $250,000 in financial assets and asked the benefactors if they felt their heirs should stick with the current advisor on the portfolio. Interestingly, 53% were relatively hands-off on the decision, saying they were unsure or that it was up to the beneficiary. Meanwhile, 26% said they should stay with them, and only 7% said they should leave the current advisor. The other 14% reported they did not have a financial advisor.
Cerulli researchers wrote that keeping a benefactor as a client may be further challenged by being in a different asset class and “not part of the advisor’s core market.” To overcome those hurdles, the consultancy suggests that advisors engage with the younger generation like they do with existing clients.
“Conducting empathetic conversations with heirs during the wealth transfer process is not just the right thing to do; it also demonstrates the kind of care and commitment the prospective clients could receive going forward,” Cerulli wrote.
McKenna also suggested working earlier with the younger generation, such as bringing them into family financial discussions, specifically regarding estate planning.
“Estate planning can be very emotional for families, and advisors can play a significant role in channeling those emotions into fruitful, empathetic conversations beyond just figures on an account dashboard,” he said. “Younger family members who see that early on tend to remember the level of care shown to their parents, which can be a strong reason to maintain a future advice relationship.”
Financial firms may also want to consider the second and third generations of advisors, presumably better positioned to work with younger beneficiaries. In a separate report issued Wednesday by consultancy DeVoe and Company, its annual look at RIA talent and growth reported declining figures when it comes to areas such as career pathing and employee development.
According to DeVoe, only 38% of advisors believe their firms offer defined career paths, down from 50% in 2024. That’s despite career pathing clarity being a top request from next-generation professionals in the sector.
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