Not So Fast! Boomers Still Largest Fee Pool for Advisors

Meanwhile, Gen X’s share of national wealth will grow from less than 14% this year to about 31% by 2030.

Deloitte said in the statement that wealth managers that had “not woken up to Generation X’s potential may be too late to the party.”

As for millennials, although their wealth will grow fastest, their share of national household wealth will be 16% in 2030, making them unlikely to seek out top-tier wealth services anytime soon.

“All that said, I don’t recommend taking your eye off the ball on this new generation of investors, as Gen X and millennials will make up half of wealth in 2030,” Vincent said.

Generational Service Offerings

Given these projected demographic shifts, the Deloitte report sketched out four generational service offerings that are likely to emerge and become the cornerstones of the U.S. wealth management business by 2030:

1. Wealthy baby boomers and Gen Xers, along with some high-net-worth millennials, will require consolidated product offerings to help them accumulate wealth and meet their midlife and retirement goals. These will include tax, retirement and estate planning. The report said pricing models will be built around consolidated product and service offerings. Establishing value of advice provided versus low-cost alternatives will be challenging, and advice will have to be available to clients in real time.
2. Many boomers and silent generation retirees will need advisory services integrated with simplified estate planning services for less affluent customers. According to the report, advisors will differentiate services by building niches around such matters as elder care, estate planning and using entitlement payouts wisely. It noted that fee squeeze could slowly creep in as customers aged and spent down assets.
3. Millennials entering the workforce, as well as their less-well-off counterparts and young Gen X households, will find starter services with varying pricing structures — usually built around robo-advisor platforms — valuable. Deloitte cautioned, however, that wealth managers will need to have a plan for when these customers become wealthier and require a broad range of services.
4. For young Gen X and millennial households burdened by debt, wealth managers will need to offer solutions built around advice to change saving and spending behaviors, with a focus on cutting debt. Firms’ pricing structure will be staggered and back-ended, with very low upfront fees. They will collaborate with banks and credit bureaus to acquire customers. And they will build synergies with other services once customers become wealthier.

“Our forecast of debt raises a clear possibility that household assets could grow faster than liabilities over the next two decades, posing a structural reason for banks to make wealth management services core to their product offering,” Jim Eckenrode, executive director of the Deloitte Center for Financial Services, said in the statement.

“Over the long term, client synergies from a strong wealth franchise could offer better growth opportunities to banks than a pure lending business. The wealth landscape in the United States is set to be dramatically different in the next 15 years.”

 — Related on ThinkAdvisor:

• Luring Millennials Is a Waste of Advisors’ Time
• Luring Millennials Is a Waste, Take 2: Serving the Children of Clients Makes Sense