Leveraging the Growing Client Base of Gen X and Gen Y

by Bill Cates

June 1, 2023

Everyone is talking about “The Big Transfer of Wealth” that has already started.

What does this mean for your business? Is there a benefit to you to use the referral process to reach these younger clients?

The Stats

The annual transfer of wealth from Baby Boomers to younger generations can vary significantly based on various factors such as inheritance patterns, economic conditions, and individual circumstances.

However, according to estimates by various studies and organizations, the annual transfer of wealth from Baby Boomers to younger generations in the United States is projected to be substantial.

A report by the consulting firm Accenture estimated that the wealth transfer from Baby Boomers to their heirs could reach $30 trillion over the course of 30 to 40 years, with an annual transfer of around $1 trillion. This projection considers the transfer of financial assets, real estate, and other forms of wealth.

That’s a whole lot of moolah… dough… cabbage!

The Breakdown

Here are the approximate percentages of the U.S. population broken down into generations:

Silent Generation (born between 1928 and 1945): Less than 1%
Baby Boomers (born between 1946 and 1964): Approximately 21%
Generation X (born between 1965 and 1980): Approximately 20%
Millennials or Generation Y (born between 1981 and 1996): Approximately 27%
Generation Z (born between 1997 and 2012): Approximately 26%

As the wealth transfer continues, your new target will NOT be Baby Boomers, but Gen. X and Gen. Y, which will be 47 percent of the population.

“Young investors will soon represent a preponderance of the population of wealth.” Fidelity Investments

The Benefits to YOU

Large population: These three generations together represent a significant portion of the population, providing a vast client base for financial advisors.
The value of your practice: A practice with some younger (and growing) clients may be worth more to a buyer than an “older book.”
Retirement planning: Generation X is approaching retirement age, and Millennials and Generation Z are starting to think about long-term financial planning. Financial advisors can help them navigate retirement savings, investment strategies, and other related concerns.
Complex financial landscape: With changing economic conditions, student loan debt, and evolving investment options, these generations face complex financial decisions. Financial advisors can provide guidance and expertise in navigating these challenges. If you can help your client reduce student loan debt, you’ll be their hero.
ESG investing: Millennials and Generation Z are increasingly interested in socially responsible investing and environmental, social, and governance (ESG) factors. Financial advisors who can incorporate ESG considerations into their recommendations can attract and retain clients from these generations.
Financial literacy: While financial literacy varies across individuals, there is a general need for improved financial education among these generations. Financial advisors can play a crucial role in educating and empowering them to make informed financial decisions. Your older clients will LOVE YOU for helping their young adult children understand financial concepts.
Changing priorities: These generations often prioritize experiences, social impact, and work-life balance over traditional wealth accumulation. Financial advisors who understand and align with these values can better address their client’s unique financial goals and aspirations.
Technologically savvy: Millennials and Generation Z are digital natives, comfortable with technology and online platforms. Financial advisors who can cater to their tech-savvy preferences will have an advantage in engaging and serving these generations.
Technology-driven advice: Millennials and Generation Z are accustomed to accessing information and services digitally. Financial advisors who leverage technology, such as online platforms and mobile apps, can provide convenient and efficient financial advice and engage these tech-savvy clients.
Long-term client relationships and wealth accumulation: By building relationships early in their clients’ financial journeys, financial advisors can establish long-term partnerships that extend across multiple life stages, creating opportunities for ongoing advice and service. And, as you know that if they create the right habits, time is their biggest asset.

Mistaken Belief

An advisor once said to me, “My clients’ children have no interest in working with their parents’ advisor.” The truth is that many advisors are having great success with building relationships with their clients’ children and when their assets transfer, the children stay with them.

Your belief will create your reality. Choose carefully!