Anyone working in the financial services industry right now has been aware of or is quickly learning about the aging baby boomer population. Whether they work for a bank, insurance company, financial planning firm, or related entity, there is a tsunami waiting offshore that is heading in their direction. Already struggling to attract clients and differentiate themselves, they now face the greatest wealth transfer in human history as baby boomers get older and die. According to the Center on Wealth and Philanthropy at Boston College, $59 Trillion will be transferred from baby boomers to their heirs over the next 40 years.
What does this mean for the financial services industry if they are not prepared and not taking measures to reduce this effect? Disaster. The baby boomers acquired significant amounts of wealth and have used their trusted advisors to manage their wealth and protect it. Many have long lasting relationships that have endured for years and acted like an annuity for the professionals in this industry. But, the adult children who will inherit the money and accounts in most cases have no relationship with the bank or financial institution of their parents. This means accounts that have been stable parts of your business will now be vulnerable.
In order to prevent this from happening, financial institutions must be forward thinking and one way is to embrace the Fintech revolution. Rather than looking at Fintech startups as disruptive technology, look for startups that can complement your business. How are you driving customer engagement? How are you making yourself relevant to the family members? How will you retain them as clients? How will you provide meaningful content and services to them?
In other words, what steps have you taken to survive the greatest wealth transfer in human history?