It’s projected that there will be a $30 trillion wealth transfer in North America alone peaking between 2031 and 2045, when 10% of total wealth will transfer hands every five years, according to an 2015 Accenture study. With that in mind, OppenheimerFunds commissioned a two-year study, The Generations Project, to get a closer look at the differences between generations, in knowledge, investment product choices and what they expect from investment advisors. The results were released in mid-June.
What OppenheimerFunds found was a disconnect, not only between various generations of investors, but between investors and their advisors. Researchers surveyed 2,000 investors and advisors; the investors had assets of at least $500,000 for millennials and $1 million for other generations, while the advisors had at least $100 million AUM.
Six key findings of the study, done by CoreData Research, revealed some issues advisors may have going forward maintaining family wealth transfer.
1. Advisors’ beliefs of what investors want are “misaligned,” and with millennials, totally wrong.
The study found that the top qualities that high-net-worth millennial investors (ages 22-37) want in their advisors are good investment performance, clear understanding of financial goals and plans, and advisor experience.
Advisors surveyed believe this generation group most wants transparency (about performance, fees and commissions), competitive fees and commissions and personalized solutions with good communication.
All generations had good investment performance on their top three expectation list, but none state fees as important in their top three qualities for an advisor.
“The most surprising was the gap in perception of what the investor thinks is important and what advisors thinks investors want,” says Matt Straut, head of RIA distribution for OppenheimerFunds. He noted that the survey went more granular with the millennial groups, breaking it into older (31-37) and younger (22-30), but all groups want good investment performance, and yet that wasn’t even on the advisor top list. “It’s great food for thought,” Straut added. “At a higher level it has to do with communication, the ability to articulate a value proposition and not just pay attention to fees.”
2. Investors mainly talk investment strategy and tax planning with their advisors, and inheritance and estate planning with family, lawyers or accountants.
Generations have different communication styles on wealth, the study found. Millennials are less likely to discuss investment strategies with advisors, and have more conflicts with family members. Boomers are the most likely to discuss long-term goals with their advisors.
3. Advisors see more family conflict than families admit.