I’m sure you’ve heard about “The Great Wealth Transfer.” For community banks, this can be a real opportunity to grow their business by deepening their relationships with younger generations, capture a larger share of their financial assets, and position themselves as trusted advisors for life.
Now, if you’re one of the Millennials who will, ostensibly, benefit most from this transfer of wealth that some say is like winning the lottery, you may feel a bit unnerved after reading this April 10, 2024 article in Fortune Magazine titled: Not all millennials can bank on the $90 trillion Great Wealth Transfer—a third say they expect nothing, and are already caring for Boomer parents plus their own kids. Yes, that’s really the title of the article… probably one of the longest in the history of journalism. And, yes, we’re talking about $90 trillion.
Anyway, it starts off like this: “Many millennials can eagerly anticipate becoming the richest generation in history as they are set to inherit their baby boomer parent’s wealth. However, a large portion of Millennials are not expecting a windfall of cash when their parents pass away.”1 Why? The soaring costs of healthcare.
Another source of info, The Week, takes a much more optimistic view in their April 8 article, The great wealth transfer: who stands to gain?:
“A $90 trillion ‘great wealth transfer’ will make millennials the "richest generation in history", according to a new study. The "blockbuster" findings predict that a "windfall" is set to "fall into the laps of millennials over the course of the coming decades, shifting the power dynamic in the economy away from boomers."2
There are concerns, however. The article goes on to say that Millennials could miss out for 2 reasons. 1) Parent health will impact their wealth and 2) this younger generation is “not equipped to handle such sudden riches.”
Now, as a community bank, there’s not much you can do about reason #1. But, there’s plenty you can do – in the way of taking a proactive and forward-thinking approach – to address reason #2. Here are a few key strategies to consider:
Segmentation and Personalization: Recognizing that different generations have distinct financial goals and preferences, you should segment your customer base accordingly, tailoring your products and services to meet the unique needs of each segment. This may involve offering personalized investment advice, digital wealth management tools, and customized financial planning solutions. Don’t forget to tailor your bank marketing messaging, as well!
Digital Transformation: As digital natives, younger generations expect seamless digital experiences from their financial service providers. Banks must invest in digital transformation initiatives to enhance their online and mobile banking platforms, streamline account opening and onboarding processes, and offer innovative digital wealth management solutions. Embracing emerging technologies, driven by AI and ML, that can assist you in collecting and analyzing customer data, can also help you deliver more personalized messaging.
Education and Financial Literacy: Many younger individuals may lack the financial knowledge and expertise needed to effectively manage inherited wealth. Banks have an opportunity to fill this gap by offering educational resources, such as workshops and seminars on intergenerational wealth transfer planning. These can help clients navigate complex estate planning issues and minimize tax liabilities, as well as facilitate the smooth transition of wealth from one generation to the next. For instance, I just received this email from a financial institution:
Ways to Build Generational Wealth and Leave a Legacy
Live Webinar
Multigenerational households are becoming more common in America, and finances are among the hardest topics to discuss especially within your family. As you navigate through life's different stages, you want to be financially savvy and prepared to take care of both your family and yourself.
Join us as we explore why it's important to teach your children to start saving at a young age, the significance of credit, how to prepare for the unexpected, and strategies for investing in your future.
Estate Planning and Trust Services: The need for estate planning and trust services becomes increasingly important as the US population ages. Your bank should expand their offerings in this area, providing comprehensive estate planning solutions, trust administration services, and fiduciary expertise to help clients protect and transfer their wealth according to their wishes. By offering these value-added services, you can deepen your relationships with high-net-worth clients and their heirs, while also generating additional fee-based revenue streams.
What’s next?
"The Great Wealth Transfer" represents an historic opportunity for banks to further solidify their position as trusted advisors and financial partners for not just the current consumers, but future ones, as well, by 1) understanding the dynamics of intergenerational wealth transfer and creating products/services around it, 2) adopting a personalized customer-centric approach to your bank marketing, and 3) embracing digital innovation. By proactively preparing for "The Great Wealth Transfer," your bank can build stronger, longer- lasting relationships with your clients – no matter where they are in their life journey – and secure your place in their financial futures. And who knows? You just may be able to bank some of that $90 trillion that’s up for grabs!
Bank Marketing Center
Here at bankmarketingcenter.com, our goal is to help you with that topical, compelling communication with customers — developed by banking industry marketing professionals — that will help you build trust, relationships, and revenue.
Our web-based platform puts our client partners in complete control of their marketing production process – and for a fraction of traditional marketing costs. We’re also proud of the fact that we currently work with over 300 financial institutions.
Want to learn more about what we can do for your community bank and your marketing efforts? You can start by visiting bankmarketingcenter.com. Then, feel free to contact me directly by phone at 678-528-6688 or via email at nreynolds@bankmarketingcenter.com.
1Fortune. Not all millennials can bank on the $90 trillion Great Wealth Transfer—a third say they expect nothing, and are already caring for Boomer parents plus their own kids. April 10, 2024.
2The Week. The great wealth transfer: who stands to gain? April 8, 2024.