Wealth managers should ask themselves:
- Can we support a cohort of female inheritors whose needs we may not understand well?
- Do we understand the imminent needs, preferences and values of younger beneficiaries?
- Have we equipped the front office to master this complex, sensitive topic?
- How do we ensure that we stand out and are seen to have a differentiated value proposition?
- Do we have a strategy to both retain assets and win inflows from competitors?
Firms that are unsure about their answers must act now to build compelling, legacy-focused propositions centered around the needs of donors and inheritors. However, our experience suggests that many firms lack confidence in their ability to initiate such a transformation.
To bridge this gap, wealth managers need a tailored strategy and operating model that is aimed specifically at the challenges of inheritance. This structured, systematic approach harnesses measures that have proven to be effective in addressing intergenerational transfers of wealth. Some of its most distinctive features can be grouped into four areas, as follows:
1. Change the inheritance narrative
Conversations about inheritance should generate peace of mind for clients, not anxiety. Shifting the narrative around inheritance is both essential and achievable.
Firms should move discussions away from “succession,” which can have negative connotations, toward family protection, legacy and purpose: Conversations about preserving wealth and protecting families in the event of ill health can be a useful starting point, serving as a catalyst for subsequent discussions around transition planning and legacy advice.
A clear understanding of how donors view the purpose of their wealth will help advisors to keep client conversations family-centered, with a clear focus on securing donors’ personal, professional and perhaps philanthropic legacies.
2. Understand female and younger inheritors
Understanding the differences between the needs, values and preferences of donors and their inheritors is indispensable. Simplistic assumptions, such as relying on younger generations’ interest in digital capabilities and engagement, will not work.
No two clients are alike, but many wealthy donors have features in common. Most are male, aged 70 or over, have benefited from decades of favorable markets and have long-standing wealth manager relationships. In contrast, inheritors’ needs and values – and banking relationships – are far more diverse and underserved.
The first beneficiaries are often female, frequently with less exposure to managing wealth. This is a client segment whose requirements and preferences have often been less well-served than their male counterparts in the past. Younger generations, too, typically have very different goals from older donors. This includes factors such as the internationalization of wealthy families, less traditional family structures, lower financial literacy and more idiosyncratic investment beliefs.5
3. Empower the front line
The first priority should be to ensure that relationship managers have the skills, resources and incentives to engage clients proactively. Specialized training and artificial intelligence-powered advisor copilots can help to build confidence and scale up engagement. Relationship managers will also need access to subject-matter experts in areas such as family governance, inheritance tax, life insurance, trust law and philanthropy.
Wealth managers should also engage with inheritors early. Pre-emptive onboarding can pave the way for client engagement and education. In addition, firms should anticipate stronger future demand in areas such as sustainability, digital assets, alternative investments or discretionary mandates.
Another key step is to compile a portfolio of tactical measures that is aimed at increasing conversion rates for inherited wealth. These could include goal-based family wealth allocations, multigenerational client coverage, first- and second-generation community management and education, and relationship manager playbooks.
4. Execute with care and patience
Years, even decades, may go by between the start of donors’ legacy planning and the conclusion of their inheritance. Gradual, patient client engagement is vital to building trust and creating long-term client value.
Wealth managers can start small by discussing plausible “what if” scenarios, introducing topics such as powers of attorney and living wills. As confidence grows, discussions will naturally move onto more complex, sensitive topics, such as final wills and inheritance planning.
Later, relationship managers can draw on specialized capabilities, such as releasing liquidity from assets like real estate and private companies, or exploring philanthropy vehicles like umbrella foundations. In-house expertise in family governance can help ensure that all voices are heard – building consensus, identifying education and stewardship needs, and preparing for multistage transfers involving life partners and younger generations.
Experience shows that developing a bespoke business and operating model for intergenerational wealth transfers can make a material difference to wealth managers’ ability to capture assets during donor lifetimes, as well as building the foundations of future growth with beneficiaries – especially among the female and next-generation inheritors who are expected to receive much of the greatest intergenerational wealth transfer in global history.
This approach is one of 20 key concepts developed by the EY Global Center for Wealth Management. Each one is strategically relevant to outperformance in wealth management between now and 2030. The full set of key concepts – and the fundamental challenges that they allow wealth managers to address – are examined in the 2024 EY Global Wealth Management Industry Report.
