Preventing client exodus amid great wealth transfer

With next-generation heirs unlikely to retain their family’s financial advisers after receiving an inheritance, Capgemini has explored how firms can work with younger generations.

According to the latest Capgemini Financial Services Top Trends 2025 report, the wealth management industry continues to undergo a “complete transformation” this year.

The intergenerational wealth transfer and growing number of younger high-net-worth (HNW) clients are both factors driving the expanded client base for wealth managers as families pass on their wealth.

Last year, Praemium’s 2024 High Net Worth Investors report found Australia’s wealthiest segment continues to grow and has reached a new high. Some 690,000 individuals are now classified as HNW, it found, representing an 8.7 per cent rise from 635,000 in 2023.

Collectively, these investors manage $3.4 trillion in investable assets, up from $2.98 trillion in the previous year and represent a clear opportunity for advisers to meet their specialist demands. 

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But data from Cerulli found almost three-quarters of next-generation family members are likely to switch advisers following a wealth inheritance, and it is vital for firms to take steps to mitigate this client exodus. 

Meanwhile, Natixis Investment Managers’ 2024 Global Survey of Financial Professionals discovered 46 per cent of advisers across the globe say the intergenerational wealth transfer represents an existential threat to their business.

Some 43 per cent are also concerned they will not retain assets from clients’ spouses or next-generation heirs.

As a result, it is critical for firms to actively work with the younger generation in order to increase the likelihood of retaining assets after the death of an older client.

This could include hiring younger staff who can strengthen personal connections with the next generation and better understand their needs, enabling them to position themselves as trusted advisers. 

Young professionals are also increasingly navigating non-traditional career paths, with wealth firms encouraged to target emerging talent in sports, entertainment and fine arts who might be seeking financial advice.

“As their careers progress, these individuals may become high-value clients,” it said. “By understanding the unique financial needs and preferences of young entrepreneurs, wealth firms position themselves as trusted advisers and partners, driving long-term growth.” 

Morgan Stanley has already launched Money in the Making, a series which educates talent in sports and entertainment about financial education and wealth management, while Standard Chartered offers a Young Entrepreneur Program for young investors in Asia.

Firms that successfully bridge the generational gap are those which offer innovative financial education, discuss investment and mitigate potential conflict to help the next generation pursue their preferences while aligning with family values and cater to emerging talent and young professionals.

Money Management also explored how next-generation Australians are increasingly leaning towards financial advice as they plan ahead for when they receive an inheritance, with Fidelity’s latest survey suggesting two in three next-gens would be at least somewhat likely to seek financial advice or planning for it upon inheriting a large sum of money.