Sixty-eight trillion dollars. That’s how much wealth is expected to be transferred from the Silent Generation and Baby Boomers to Generation X and Millennials in the coming decades.
Some reports say this amount could be as high as $84 trillion by 2045. Either way, it’s a huge deal for financial advisors and their clients, both those who currently hold the wealth and those who are set to inherit it.
When so much wealth is changing hands, it creates both opportunities for growth and risks for loss. There’s even a saying about the risk of losing family wealth: “shirtsleeves to shirtsleeves in three generations.“
This means that most family wealth disappears within three generations, often due to poor planning, lack of preparation, or a lack of financial education.
What does this mean for financial professionals? If they manage things well, their business could grow significantly. But if not, they might lose clients or see their clients lose money, which would hurt their business. This presents a big opportunity for a family wealth planning advisor who can effectively manage wealth across generations.
What is Family Wealth planning?
Family wealth planning, also called generational wealth planning or estate planning, is all about building and protecting financial resources for future generations.
The goal is to make sure the family’s wealth grows, is well-managed, and is passed on to future generations.
Family wealth planning can include things like managing investments, donating to charity, planning for real estate and transferring wealth, and also covering parts of financial planning, such as taxes or retirement planning.
How does family wealth planning differ from financial planning?
Financial planning is all about helping people reach their personal financial goals, both short-term and long-term.
Whether it’s saving for retirement, buying a second home, managing taxes, or protecting assets, financial planning advisors work with clients to set goals and create a plan to achieve them as life changes.
Family wealth planning, on the other hand, focuses on passing wealth to the next generation. It’s about ensuring that family members and loved ones can keep or grow their financial future.
While family wealth planning includes many of the same elements as financial planning, it also deals with more complex issues like preserving wealth over time, managing family businesses, charitable giving, and setting up trusts to make sure the wealth is passed on smoothly.
Why do you need a family wealth advisor?
The financial world is always changing. Most people are not even aware of how these changes could affect their financial goals, including –
- wealth planning and
- retirement
That is where a family wealth management advisor becomes your ideal partner to help you stay on track with your financial plans.
A skilled yet experienced advisor will guide you through important areas like –
- tax optimization,
- estate planning,
- investment management, and
- retirement planning.
No matter where you are in your career or how much planning you’ve already done, advisors can help you build a plan to maximize your investments and reach your goals.
The experts will assess your risk tolerance and work with you to educate you about the ever-changing financial landscape.
You get help with adjusting your plan as needed.
