February 26, 2024



As the next 20 years progress, trillions of dollars will flow to family trees. The “Great Wealth Transfer” is coming.

But new research from New York Life suggests that many Americans preparing to inherit an inheritance need guidance because they lack the confidence to manage their impending wealth.

company recurring Fortune Watch Survey Surveyed 4,437 adults in early June about their ability to secure their financial future. According to New York Life, 15 percent of American adults expect to receive an inheritance within the next ten years.

However, only 42% of adults expecting an inheritance feel very comfortable handling the wealth they will pass on. Additionally, heirs cite lack of emergency savings (29%), health care costs (27%) and credit card debt (26%) as the top risks to their financial security and well-being.

“We remain in a volatile economic environment. Inflation and rising interest rates continue to make credit card debt a challenge, compounded by unexpected expenses and a lack of emergency savings,” Suzanne Schmidt, New York Life’s director of financial health, said in a statement. “The data show that people continue to focus on the basics — paying off debt, building emergency savings and contributing to retirement — but planning long-term goals like buying a home, raising a family or retiring can feel overwhelmingly difficult when day-to-day challenges occupy your time and attention.”

read more: Will Generation X miss out on the Great Wealth Shift?

wealth transfer and win the heir’s business Remains key to growth for many wealth managers and industry research firms Total $72.6 trillion, says Cerulli Associates Assets pass to heirs through 2045.

But wealth managers are still not prioritizing younger prospects. Report from Arizent, parent company of Financial Planning This explains how advisors can keep up with their peers who are further along in their pursuit of the next generation, yet only 35% consider younger investors a “key priority” or “high but not key priority” for acquisitions.

Younger clients lag behind high-net-worth clients with at least $1 million in investable assets but less than $30 million, and ultra-high-net-worth clients with at least $30 million, as well as business owners and retirement plans such as 401(k).

The Arazent survey found that only 57% of firms have a comprehensive wealth transfer strategy in place for these clients, defined as “the framework for ensuring the client’s ability to successfully transfer assets to heirs.”

This gap is particularly pronounced between the largest firms (each with $1 billion or more in assets under management) and the smallest firms (under $100 million in assets under management).

More than two-thirds, or 68 percent, of the largest firms have a wealth transfer strategy, but only 42 percent of the smallest firms have one.

when Discuss the Great Wealth Shift at the Financial Planning 2023 INVEST ConferenceJoy Crenshaw, head of global sales and advisor development at Nuveen, says a big part of winning the battle with the next generation of customers is working with them from new perspectives.

Crenshaw also said the industry should rethink how it calls this client segment to make their value clearer to wealth managers.

“I really don’t like the concept of young investors because it puts them in a box,” she said. “We really should be looking at them as our future high-net-worth clients. If we change that mindset, what behavioral changes will happen?”

As advisors grapple with ways to attract the next wave of wealth, here are some key takeaways from New York Life that can help them understand heirs’ top thoughts.