Tag Archives: Intergenerational wealth transfer

Only 2% of Advisors know how to maintain the next generation of clients

From Advisor.ca article “Adapt to Wealthy Client Needs, or else” by Dean Dispalatro October 2013

Mr Dispalatro writes in his article about some wisdom shared by Keith Sjogren, managing director of consulting at Investor Economics including what he outlined as the 3 trends impacting the wealthy. 

  1. Sluggish economic growth resulting in income being depressed and personal wealth not growing
  2. Concentration of wealth in Canada’s is growing steadily. Those with more than $1M in investible assets now control 2/3 of the country’s wealth
  3. Debt reduction is a top priority with the wealthy

All of this leads Sjogren to conclude that the wealthy need more advice; but wealth management advice not investment advice. He also suggests that more attention should be paid to those with high incomes who have not yet accumulated assets of $1M as they probably will as real estate or business interests are sold and inheritances are received 

But he also points out the demographics of wealth at play.  By 2022, more than half of wealthy people will be older than 65. & that demographic is not made up of conspicuous consumers but  capital protectors with a big focus on leaving a legacy for their children. Hence, he concludes that advisors should shift their focus from “accumulation to preservation.”

Indeed the $900 billion that is set to change hands in the next 10 years.at least half will happen in wealthy families, making estate planning a key priority offering. But the issue remains; advisors are not doing an adequate job of getting to know the families of their clients;  which as he says “is a sure-fire way to lose the next generation when wealth changes hands

Investor Economics data backs this concern up.  When assets are transferred to a widowed spouse, only 55% keep the same Advisor.  When assets are transferred to the children, a whopping 98% move to a different Advisor.

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