The intergenerational wealth transfer

As the wealth management industry continues its evolution, the next decade will bring profound shifts driven by the intergenerational transfer of wealth and changing client expectations. 
 

For wealth managers, this is not just a trend to monitor—it's a critical challenge to address now. It involves a fundamental rethinking of service models, technology adoption, and the client experience across generations.

A massive transfer is underway.

As of 2023, baby boomers held the lion’s share of wealth in the U.S. Despite comprising only about a quarter of the U.S. population, they control about 55% of the nation’s total wealth. In contrast, millennials, who represent about 25% of the population, hold only 8% of the wealth, and Gen Z is even further behind.¹ However, as baby boomers age and pass on their wealth, these generational shifts will trigger an estimated $84 trillion in wealth transfers by 2045, with a significant portion directed to heirs.²

While the initial narrative around the great wealth transfer often focused on millennials as the primary beneficiaries, there’s growing recognition of Gen X’s pivotal role in this process. Gen Xers are poised to inherit a portion of the wealth currently held by boomers. As boomers retire and pass on their wealth, it’s increasingly clear that Gen X will experience a more immediate wealth transfer than millennials, making them key players in shaping the future of wealth management.

This shift presents a unique opportunity—and risk—for wealth managers. Historically, much of the industry’s focus has been on serving boomers and their needs. But as Gen X also enters retirement and millennials and Gen Z inherit this wealth, firms must rethink their strategies to serve multiple generations.

Studies find that 70% of heirs switch financial advisors after the death of the primary decision-maker in the household.³ If your firm is not actively preparing for this transition, you risk losing the wealth associated with these households to competitors.

Excluding charitable donations, around $53 trillion will be passed down through the generations.² Wealth managers must operate a multi-generational service model. This involves engaging not only the majority-wealth holders of today (boomers and Gen X), but also their heirs. It’s essential to develop personalized strategies that bridge generational gaps, ensuring continuity of service and maintaining relationships across changing family dynamics.

A new generation of clients is changing investor expectations. 

Millennials and Gen Z are not just passive inheritors—they are emerging as an active, wealthy demographic with different expectations. While they may have less wealth now, their financial circumstances are evolving rapidly. By 2030, millennials will command a significant portion of wealth, and their preferences for advice will shape the industry for decades to come.⁴ 

In fact, 85% of millennials and Gen Z prefer behavioral coaching from their advisors, highlighting a desire for more than just transactional financial advice.¹ They want personalized, values-based guidance and expect their portfolios to align with their social and environmental values. This means that your service models must go beyond traditional investment advice to include financial planning that is both holistic and values-driven.

This expectation of hyper-personalization extends to all aspects of wealth management, from retirement planning to investment management, and even estate planning. Simply put, your clients expect to be seen and understood as individuals, not just as account holders. 

Here are four steps you can take to help ensure your service model meets these expectations:

1. Leverage technology to deliver personalization at scale.

Technology is a key enabler of personalization. The wealth management industry has been slower to adopt technology compared to other sectors, but the tide is shifting. Millennials and Gen Z, in particular, are driving the need for digital tools that enhance the client experience. And they’re not the only ones—post-pandemic, we’ve seen an increase in the demand for better financial technology from Gen X as well.  

For instance, the demand for mobile banking apps has surged across multiple generations, particularly among Gen X and millennials, with 56% of Gen Xers indicating they would switch financial service providers for a better mobile app.⁵ Advisors who don’t consider the digital experience as a core part of their offering risk falling behind competitors who are tapping into this demand.

Moreover, technology allows wealth managers to scale personalized services. By using data-driven insights and automation, firms can offer more tailored advice on a large scale. As client expectations evolve, advisors will need to leverage these tools to offer advice that is both timely and relevant, reducing the emotional impact of market volatility and ensuring clients stay invested during downturns.

2. Help clients stay the course with behavioral coaching.

To truly serve clients effectively, advisors must understand behavioral finance and its impact on decision-making. People tend to view their financial assets in "mental buckets"—designating different sums of money for specific goals. Understanding this dynamic is essential when managing clients’ emotions during market volatility.

For example, if a client understands that their retirement funds are lower risk, then they’re more likely to stay the course with a long-term strategy, even if their “discretionary” funds for purchasing a new boat are exposed to market fluctuations. Behavioral coaching, therefore, is essential to helping clients navigate their emotions during times of uncertainty. Advisors who can reframe the client experience around probability of outcomes—rather than performance against market benchmarks—can build stickier relationships and foster trust, even in challenging times.

Incorporating behavioral coaching and a goals-based investing approach into your service model is not just a nice-to-have, it’s a must. It can help clients better understand their biases, stay focused on their long-term goals, and make more rational decisions, even during times of market volatility.

3. Tailor your service models to fit your clients’ diverse needs. 

In order to thrive in this new wealth management landscape, segmentation is key. Many advisors serve clients based on account size, but with the rise of new generations and more sophisticated financial needs, it's critical to segment by life stage, goals, and preferences. This approach allows you to engage with a wider variety of clients while delivering personalized services that are relevant to each segment.

Segmentation also helps in managing relationships with larger households and more complex financial scenarios, such as trusts, estates, and tax management. Advisors who focus on building comprehensive, multi-generational strategies for clients will be better positioned to retain wealth long-term and maximize profitability.

4. Personalize your tax management strategies.  

Wealth managers can also add immense value through tax management services. Clients want advice that is specifically tailored to their tax situation, yet only about 40% of advisors actually offer these services.⁶ By implementing tax strategies such as tax loss harvesting, time-shifting losses, and holding period management, advisors can demonstrate significant value every year, improving retention rates.
 

Tax management isn’t just about saving money—it’s a critical part of building a long-term relationship with clients, particularly as wealth transfers across generations. By delivering tax alpha through personalized tax strategies, you’ll provide more durable value that resonates with clients, increasing the likelihood that they will remain loyal through the wealth transfer process.

The intergenerational wealth transfer is not just a challenge—it’s an enormous opportunity. 

As baby boomers and Gen X pass on their wealth and younger generations take the helm, wealth managers must rethink their service models to align with these changing dynamics. The wealth transfer will be massive, but only those who are prepared with a clear, multi-generational strategy—coupled with technology, personalization, and behavioral finance insights—will be well-positioned to retain their clients and thrive. 

If you fail to adapt to these changing dynamics, you risk becoming irrelevant in the face of more agile competitors. But if you take proactive steps now, you can position your firm to thrive during the largest wealth transfer in history. The future of wealth management is here, and the question is: will you be part of the 30% of advisors who retain clients after the death of the primary decision-maker?

¹ Institutional Insights: It's Time to Change Your Mind about Young Investors, Fidelity Institutional (2024), SEI
² Cerulli, U.S. High-Net-Worth and Ultra-High-Net-Worth Markets 2021, January 20, 2022
³ Cerulli Associates, Aging Boomers Bring Intergenerational Planning to the Forefront, July 19, 2021
⁴ WealthEngine, ‘The 2019 Millennial Wealth Report.’
⁵ ‘BAI Banking Outlook Special Report: Banking Attitudes, Generation-by-Generation’, Bank Administration Institute and BAI Center (2021)
⁶ SEI Direct Indexing Survey 2020, N = 95, and Discovery Data

This material is for educational purposes only and represents an assessment of the market environment at a specific point in time and is not intended to be a forecast of future events, or a guarantee of future results. 

Services provided by SEI through its subsidiaries and affiliates. Neither SEI nor its subsidiaries provide tax advice.