Intergenerational Advice Part 1: the opportunity worth chasing


One upside of our ageing population is the impending intergenerational transfer of wealth to Gen X and Y over the next 30 years.

Like most developed countries, Australia is facing the challenge of an ageing population. It is estimated that by 2020 there will be more 65 year olds than one year olds in Australia, leading to a complete inversion of the “population pyramid”[1].

This will pose a number of economic problems as the pool of active, productive workers in the economy continually shrinks in favour of a larger and larger set of retired individuals. One upside of our ageing population however, is the impending intergenerational transfer of wealth to Gen X and Y over the next 30 years, estimated to be around $2.4 trillion[2].

The threat of not having an intergenerational advice strategy

On paper, this seems like a boon for advisers. However, over the past two to three decades, growth in the financial advice profession has largely been driven the baby boomer generation. There has been a much smaller uptake by subsequent – particularly Gen Y or ‘Millennials’, who are the least trusting of institutions[3].

This lack of trust in these long-time pillars of society is striking in both its depth and breadth. No one is spared their side-eyed looks, with high levels of distrust across the mainstream media, government and of course, financial institutions, of which 86% say they only “sometimes” or “never” trust[4].

The challenge and opportunity for advisers lies in capturing this next generation. While having a book of wealthy boomer clients is a benefit in the current environment, in the coming years it will pose an increasing ‘leakage’ risk.

In fact, current research shows that only 2% of adult children keep their inheritances with their parents’ financial adviser once the wealth transfer takes place[5].

This poses a very real threat for advisers, with only 22% have implemented an intergenerational advice strategy to connect with the next generation of clients. Even fewer (15%) have built engagement models specific to Gen X and Y (Millennials).

Without engaging the next generations in clients’ families, once the wealth transfer happens, the significant risk is that the business will walk out the door as kids engage a new adviser or remain unadvised.

Research reveals that in 61% of cases where an older parent passes away with a will in place, it was never previously socialised with the family unit. 70% of these family relationships break down as a results, with assets lost during the transition[6].

Of these breakdowns:

  • 60% are caused by an internal failure of “trust and communication” within the family;
  • 25% by a lack of “preparation of heirs”;
  • 10% due to an absence of an agreed-upon “mission” for the family wealth;
  • 5% to other causes such as failures to file, sign, or an incorrect interpretation of tax law.

This indicates clearly that clients are not having fundamentally important conversations with their family, particularly their children, around the dining room table.

The fact remains that for advisers with a book of predominately baby boomer-aged clients, almost all will be impacted by this inheritance conundrum.

Family matters

Whatever else might be said of Gen Y, one thing that hasn’t changed from previous generations is the value they place on their family. In fact, their wellbeing – physically and financially – is often cited as one of the biggest worries keeping clients up at night.

A recent report found Australians are far more focused on family than they are on themselves, with three in five indicating that if there were no limits to their income, their first investment would be something to help build a better future for their family.

Hope is not lost – the first steps to intergen success

Despite only 5% of Gen X and Y having an ongoing advice relationship, a staggering 85% who expect to receive an inheritance say that they plan to seek advice in the future[7].

So, whether you’re an insurance specialist or provide holistic advice, there is significant blue ocean opportunity around this future high net worth group. The even better news? 68% of Gen X and Y whose parents are financially advised recognise the value of advice. This figure drops dramatically, to just 8% for the same demographic whose parents have no advice relationship.

Learning from advisers who are already reaping the rewards of a fruitful intergen process show there is a clear benefit in establishing an emotive connection between protection solutions and an improvement in the lifestyle and wellbeing of a client’s family.

However, even more important is developing a unique engagement strategy tailored to the XY generation because as we all know, what you value when your 30 years old is very different to what you value at 60.

How did they do it?

They built a tribe – the modern day (online) version of prospecting, if you like. Instead of knocking on doors, today’s intergen advisers are hustling online however, just like banging down doors, it’s a lot of work. They’re building a tribe of ideal clients – effectively a sales funnel – by blogging, podcasting, writing, and collecting client details via their social networks, in exchange for content.

To find out how to engage Gen X and Y by building your own tribe, make sure you read Part 2 in our Intergenerational Advice series.


[1] Australia
Future, mccrindle research.
[2] ING Direct, ‘The Truth About Gen X and Gen Y’, 2016.
[3] Hartmans, A, Millenials’ distrust of banks is spawning a new breed of start-ups, August 2016.
[4] Cillizza, C, Millennials don’t trust anyone. That’s a big deal, The Washington Post, April 2015.
[5] Accenture : The “Greater” Wealth Transfer, Engaging and Retaining Families, Investment Management Consultants Association.
[6] Doolin, Priesser and Williams, 2011.
[7] ING Direct, ‘The Truth About Gen X and Gen Y’, 2016.

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