Understanding the challenges of generational wealth transfer
The biggest risks for financial professionals are often concentrated on predictable gaps between clients, families and their expectations. Recognizing these gaps early can help reduce client retention risks, strengthen multigenerational relationships and support your practice growth long term.
2 moments define the retention challenge
Client retention risk often happens at 2 key moments. The first risk occurs after the death of a spouse or partner. Protective's research found that for more than 50% of married/partnered clients, financial professionals primarily or exclusively work with only one individual.2 The second risk happens when assets transfer to beneficiaries after the death of the surviving spouse or partner.
If you haven’t already actively engaged with your client and their beneficiaries, these relationships can weaken or break. Maintaining client continuity through these moments depends on how much preparation you, clients and beneficiaries have done before the transition begins.
Bequestor and inheritor expectations are often misaligned
Bequestors often lead straightforward financial lives and prioritize their own needs. Only 20% plan to make lifetime transfers. Many inheritors don’t share the same financial professional as bequestors, and 60% also expect to receive assets during the bequestor’s lifetime, according to Protective's latest research.
Not surprisingly, this misalignment in expectations often creates friction, confusion and missed opportunities to engage everyone early. Without the alignment that comes from building relationships with both bequestors and inheritors, financial professionals may not be part of financial decisions made by future generations.
Family engagement gaps create relationship and transition risk
In many households, one spouse is often more engaged in planning with a financial professional than the other. If the engaged spouse/partner passes away first, the relationship is at risk of breaking down. Families also experience engagement gaps with each other. They feel close but are concerned that family conflict will arise during the wealth transfer process.
Protective’s research also revealed that 51% of financial professionals still lack a fully implemented plan to engage adult children of their clients.
This limited engagement across all parties involved can increase the chances of:
- Relationship disruption
- Delayed decisions
- Assets moving outside the practice
Recognize gaps and prepare clients early
You have an opportunity to build confidence, continuity and practice growth that spans multiple generations.
Retaining clients through the entire wealth transfer process involves:
- Engaging both members of a couple
- Making transfer readiness visible
- Normalizing heir contact early
- Engineering continuity before assets move
Use our checklist to give clients a practical starting point as you help them navigate their generational wealth transfer.
