81% Of Young Millionaires Will Drop Parents' Advisors, Capgemini Says
Financial advisors worried about client retention amid the great wealth transfer are getting a bit of bad news from a recent study: A new wealth report released by Capgemini’s Research Institute found a significant number of inheritors are planning to leave their parents’ advisors within the next few years.
The firm’s annual “World Wealth Report” surveyed more than 6,400 high-net worth individuals, including 5,473 next-generation wealthy individuals across four regions: the Americas, Europe, the Asia-Pacific region and the Middle East. Of those surveyed, 81% of inheritors said they will switch advisors within a year or two of inheriting their parents’ fortune, Capgemini found.
The information technology consulting firm also found that wealth will be passed in three phases: 30% of wealthy individuals will receive their inheritance by the end of 2030; 63% will receive it by the end of 2035; and 84% will get it by 2040. The significant number of inheritors looking to switch advisors means those professionals must start rethinking their services, said Kartik Ramakrishnan, CEO of Capgemini’s Financial Services Strategic Business Unit.
“The next-generation of high-net-worth individuals arrive with vastly different expectations to their parents,” he said in a press release. “This necessitates an urgent shift away from traditional strategies to effectively cater to their evolving needs on this wealth journey.”
New investors are looking for specific services that advisors may not be used to offering. For instance, 63% of millennials and 49% of Gen Zers want more alternative investments and niche products such as cryptocurrency in their portfolios.
Many also want greater access to certain offshore emerging wealth hubs like Singapore, Hong Kong, the United Arab Emirates and Saudi Arabia. They also want more tailored services including luxury travel, medical care and protection against cyber-threats, the study said.
Finally, the younger clients want advisors to offer more advanced digital tools, with 65% of millennials and 52% of Gen Z saying they expect that from their wealth management firm.
“Firms must also prepare to equip advisors with the digital capabilities, potentially augmented with agentic or generative AI, to mitigate the risk of losing both clients and key employees,” Ramakrishnan said. (“Agentic AI” refers to systems that work autonomously.)