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The "Great Wealth Transfer" Poses Both Risks And Opportunities for Advisors
Here's how to make the most of it
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Happy Sunday everyone, and welcome to Benzinga’s financial advisor newsletter.
Today we’re discussing the challenges and opportunities that the coming “Great Wealth Transfer” poses for advisors, in terms of retaining assets, connecting with clients, and much more.
So, let’s get into the Industry Chatter!
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INDUSTRY CHATTER
A recent survey by Naxtisis Investment Managers reveals that financial advisors worldwide are concerned about retaining clients and assets during the impending "Great Wealth Transfer." This massive transfer of over $84 trillion in assets over the next two decades is seen as a significant threat by 41% of advisors.
The survey, conducted among 2,700 advisors across 20 countries, found that 30% worry about retaining assets from clients' spouses or children. While advisors report retaining 78% of relationships when spouses inherit, this drops to 58% with clients' children. Overall, 22% of advisors have already lost significant assets through generational attrition.
Extend Services To Client Families Now
To combat this trend, advisors are aiming to add an average of 16 new clients annually and grow their AUM by 11%. Relationship-building is cited by 92% of advisors as their primary retention strategy. Many are extending family wealth planning discussions to clients' family members and offering additional services like trust and networking services.
However, advisors face challenges in prospecting for new clients, dedicating only 8% of their weekly time to this task. They're prioritizing pre-retirees and those entering retirement, with 96% focusing on the 50-60 age group and 88% on the 60-65 bracket. Interestingly, 46% are also targeting younger accumulators aged 35-50, while only 14% are prospecting among the 18-35 age group.
To enhance their prospecting efforts, about half of the advisors plan to create dedicated prospecting teams. Many are also leveraging social media strategies (43%) and considering AI-powered tools (21%) for client acquisition.
Asking For Referrals Is Key
Dave Goodsell, executive director of the Natixis Center for Investor Insight, emphasizes the importance of asking existing clients for referrals as a key growth strategy. He also notes that deepening relationships with clients and expanding financial planning services will be crucial for long-term success in the face of these demographic shifts and competitive pressures.
As the wealth transfer accelerates, advisors must adapt their strategies to navigate both short-term economic risks and long-term business challenges to ensure the continuity and growth of their practices.
SPONSORED CONTENT
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MARKET RECAP
Wall Street powered ahead this week as stronger-than-expected bank earnings and upbeat guidance pushed the S&P 500 and Dow Jones Industrial Average to record highs.
The September retail sales report positively surprised expectations, while a notable drop in weekly jobless claims reinforced the perception that the U.S. economy remains strong.
This momentum has led some economists to reconsider their expectations for the Federal Reserve's next move, with growing doubts about the likelihood of further interest rate cuts as the economy races at full throttle.
The recent upswing in Treasury yields brought a twist to the housing market, sending mortgage rates soaring and hammering mortgage demand. Homebuyers pulled back sharply, with mortgage applications recording the sharpest weekly plunge since the depths of the pandemic in April 2020.
In the commodities market, oil prices tumbled below the $70-per-barrel mark, marking their worst weekly performance since December 2022. The selloff was triggered by a slight easing of tensions in the Middle East, though the geopolitical landscape remains fraught with risk.
Gold's Bullish Trend
Gold, as tracked by the SPDR Gold Trust (GLD), shined bright this week, surging to an all-time high above $2,700 per ounce. The precious metal logged four consecutive days of gains, cementing its status as a safe-haven asset ahead of the highly awaited U.S. presidential elections. Bank of America sees further upside to $3,000 per ounce.
Netflix Beats Expectations
Netflix Inc. (NFLX) reported strong third-quarter earnings, exceeding both revenue and EPS forecasts, and provided bullish guidance for the fourth quarter. The streaming giant anticipates a significant subscriber boost, largely driven by the popularity of “Squid Game” and its upcoming global content expansions.
Bitcoin ETF Inflows
BlackRock’s iShares Bitcoin Trust (IBIT) saw strong inflows, surpassing $1 billion in a week, indicating strong institutional interest. Fidelity leads Ethereum ETFs with $31 million in assets, reflecting growing demand for cryptocurrency exposure in traditional investment vehicles.
iPhone 16 Sales
Apple Inc. (AAPL)'s iPhone 16 experienced a 20% sales increase in China, fueled by strong demand. The absence of AI capabilities led to early price cuts, highlighting competitive market pressures and evolving consumer expectations for advanced smartphone features.
THE WEEK AHEAD
Economic Data
Monday: South Korean and German Producer Price Indices
Tuesday: US API weekly crude oil stock
Wednesday: US existing home sales, crude oil inventories
Thursday: US new home sales and building permits
Friday: US Michigan Fed consumer sentiment, durable goods orders
Earnings
Click here for the full calendar of economic data and earnings reports.
WHAT THE PROS ARE WATCHING
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