Intergenerational Wealth Transfer: Seizing the HNW Opportunity

This report sizes the opportunity intergenerational wealth transfer in the HNW space will provide over the coming decade. It provides detailed recommendations about how best to target and service the next generation of HNW investors. The report also provides a detailed discussion on the effectiveness of different retention strategies. It is based on proprietary data.

Over the coming 10 years, $8.6tn of global HNW wealth will change hands. This will open the door for significant industry churn, given that 28.3% of HNW clients’ children discontinue the relationship with their parents’ wealth manager upon inheriting. This means $2.4tn of HNW wealth will move from one competitor to another as inheritors look for a provider better suited to their needs. Building ties with the next generation early on is the most effective means of retention, and providers should encourage their current HNW clients to involve their children in their financial affairs. Providers also need to be aware of the next generation’s different service requirements, given their greater focus on digital channels, socially responsible investing, and social media.

Scope

- 38% of HNW investors are over 60, compared to less than 14% of the global population.

- Involving the next generation in the estate planning process is the most effective means of retention.

- Ethical investments, social media, and digital channels are more important to the next generation, with the latter perceived as a hygiene factor.

- The 40+ HNW age segment is more likely to work in traditional industries, while younger HNW investors gravitate to industries such as media, tech, and telecommunications.

Reasons to buy

- Seize the opportunity intergenerational HNW wealth transfer provides and understand how much HNW wealth will change hands over the coming years.

- Minimize customer churn rates at the time of inheritance by gaining a detailed understanding about the effectiveness of different retention tools.

- Develop and enhance your client targeting using our proprietary data on the effectiveness of various strategies when reaching out to the next generation of HMW investors.

- Understand how service requirements differ between the current and next generation of HNW individuals.

- Understand what selected competitors are doing to successfully reach out to the next generation of HNW investors.

Companies mentioned

HSBC

Credit Suisse

BBVA

NatWest

UBS

ICBC

China Construction Bank

Bank of China

Agricultural Bank of China

ANZ

Citibank

BNP Paribas

BMO

DBS

Bank Sarasin ...

HSBC

Credit Suisse

BBVA

NatWest

UBS

ICBC

China Construction Bank

Bank of China

Agricultural Bank of China

ANZ

Citibank

BNP Paribas

BMO

DBS

Bank Sarasin

Personal Capital

Standard Bank

JP Morgan

Table of Contents

Table of Contents

1. EXECUTIVE SUMMARY

1.1. Over the next 10 years, $8.6tn of global HNW wealth will change hands

1.2. Key findings

1.3. Critical ...

Table of Contents

1. EXECUTIVE SUMMARY

1.1. Over the next 10 years, $8.6tn of global HNW wealth will change hands

1.2. Key findings

1.3. Critical success factors

2. SIZING THE OPPORTUNITY

2.1. $8.6tn of global HNW wealth will change hands over the next 10 years

2.1.1. The opportunity is not spread equally across the globe

2.1.2. Aging Europe makes intergenerational wealth transfer a top priority for local wealth managers

2.1.3. HNW wealth transfer is a story about patriarchs, but this is slowly changing

2.1.4. Inheriting spouses will play a key role in intergenerational wealth transfers

3. TARGETING AND RETAINING THE NEXT GENERATION OF HNW INVESTORS

3.1. Globally, 28.3% of HNW clients’ children move their parents’ assets to a new provider when they inherit

3.1.1. North American inheritors are significantly more loyal than their global peers

3.1.2. An opportunity for one wealth manager is a threat to another - and complacency is high

3.2. Building ties with the next generation of HNW investors early on is the single most effective means of retention

3.2.1. Wealth managers should encourage their clients to involve their children in the estate planning process

3.2.2. Involving the next generation of business owners is a must in countries with an aging entrepreneurial community

3.2.3. Involving the next generation will also have a positive effect on retention rates

3.2.4. Too few wealth managers target HNW clients’ children at a young age

3.2.5. Access to an advisor younger generations can identify with is more important than brand image, but neither approach should be used in isolation

3.2.6. A greater willingness to take risks makes retention more of a challenge

3.3. Targeting the next generation of HNW investors begins with understanding their differing servicing needs

3.3.1. The next generation of HNW investors is independent, internationally active, and less involved in traditional industries

3.3.2. The next generation of HNW investors expects a multi-channel approach

3.3.3. Investing in socially responsible companies is important to the next generation

3.3.4. Social media remains underutilized as a communication and marketing tool

4. APPENDIX

4.1. Abbreviations and acronyms

4.2. Definitions

4.2.1. HNW

4.3. Supplementary data

4.4. Methodology

4.4.1. GlobalData’s 2018 Global Wealth Managers Survey

4.4.2. GlobalData WealthInsight

4.4.3. Net importance score

4.5. Secondary sources

4.6. Further reading

List of Tables

List of Tables

Table 1: HNW age distribution, 2018

Table 2: Question: What are the two most important factors minimizing the risk of the next ...

List of Tables

Table 1: HNW age distribution, 2018

Table 2: Question: What are the two most important factors minimizing the risk of the next generation of HNW investors switching to a competitor after inheriting? (part one)

Table 3: Question: What are the two most important factors minimizing the risk of the next generation of HNW investors switching to a competitor after inheriting? (part two)

Table 4: Net importance score: Relative to your current generation of HNW investors, how important would you say the following products, services, and features are to the next generation

List of Figures

List of Figures

Figure 1: $4.5tn of HNW wealth will change hands in North America over the next 10 years

Figure 2: A fifth of ...

List of Figures

Figure 1: $4.5tn of HNW wealth will change hands in North America over the next 10 years

Figure 2: A fifth of Europe’s HNW population is above the age of 70

Figure 3: Female HNW investors tend to be younger than their male counterparts

Figure 4: UBS has declared females a key target segment, requiring more focus on legacy planning

Figure 5: North American HNW inheritors are more loyal than their global peers

Figure 6: 52% of wealth managers globally regard intergenerational wealth transfer as an opportunity

Figure 7: Involving the next generation during the estate planning process is the most effective means of retention

Figure 8: 24% of industry participants rate HNW demand for inheritance planning as very strong

Figure 9: HSBC Private Bank’s succession planning proposition is aimed at HNW clients and their families

Figure 10: 85% of business owners in the US are aged 65 or above

Figure 11: Credit Suisse targets the next generation of HNW investors early on

Figure 12: BBVA introduced the Next Generations program to educate the next generation of clients

Figure 13: Globally, a quarter of HNW clients’ children have an account with their parents’ provider in their childhood

Figure 14: UBS’s refreshed brand image is in line with the values of the next generation of HNW investors

Figure 15: Globally, the next generation of HNW investors is more willing to take risks

Figure 16: The rising number of female HNW investors calls for a more targeted servicing approach

Figure 17: BMO targets family business owners concerned about succession - a key demographic in Canada

Figure 18: Younger clients are much more open to digital financial management tools

Figure 19: A digital strategy is of greater importance to the next generation of HNW investors

Figure 20: Younger generations are notably more likely to use robo-advisors

Figure 21: Younger generations’ philanthropic endeavors are more likely to focus on children

Figure 22: Personal Capital targets wealth investors with its SRI offering

Figure 23: In the majority of countries, social media is more relevant to younger clients

Figure 24: BNP Paribas actively promotes its wealth brand on Twitter

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