Join to learn more about:
- The client acquisition opportunity and practice challenges facing advisors
- Best practices in developing a differentiated wealth transfer strategy
- Client portfolio preferences over time and how advisors need to adapt
- Leveraging technology tools to advance wealth transition goals
Michael Moeser (00:07):
Welcome everyone to today is session, winning the Great Wealth Transfer. My name is Michael Moeser, I am your Moderator and Host, and today I am joined by Joy Crenshaw, Senior Managing Director of Nuveen. Joy leads an award-winning advisor education team who spend much of their time and expertise on helping advisors prepare their practice wealth transfer. Welcome, Joy.
Joy Crenshaw (00:29):
Thanks for having me.
Michael Moeser (00:30):
Super. So we are going to be talking about research that we have conducted recently and we are going to be listening to Joy's expert thoughts on what we are hearing in the marketplace. And so we conducted research that is yet to be released to understand how advisors have prepared themselves for the greatest wealth transfer in our nation's history, over $73 trillion. And it is amazing in terms of the size of that transfer. When I was thinking about it this morning, I keep saying 73 million or 73 billion, but it is really trillion with a huge amount of money that is going to flow from today is existing clients to tomorrow's high net worth clients. In this research we surveyed roughly a quarter of the people we surveyed were with firms that had less than a hundred million in assets, about a third had 100 million to a billion in assets, and then the remaining one third or 1 billion or more. In today is session we are going to be talking about four specific areas, Client Acquisition opportunity, wealth transfer strategy, portfolio preferences, and Technology tools. So let us get started with our first section Client Acquisition opportunity. What we are seeing here in terms of the top three biggest challenges advisors are seeing three of the top four were around attracting clients, onboarding clients, and retaining clients with improving operational efficiencies, sort of rounding out the top four. And the next four we are really about managing the practice for the future. Joy, does this surprise you? How do these four items down at the bottom really set up advisors to handle that great wealth transfer opportunity?
Joy Crenshaw (02:18):
Well, there is a lot to unpack on this slide, so it may be helpful to start at the top as you mentioned and then work our way down. So when we think about attracting new clients, it is not surprising that that is a top challenge as well as a top priority for advisors. It has been for many decades and will likely be so for the foreseeable future, but what has changed or really should change is the way that we think about attracting and retaining clients given two significant shifts that are happening in our industry. And they are really on a way for collision, which is an aging client base, and I think of that as book risk as well as the great wealth transfer that you mentioned before. So these two fundamental shifts really us to think differently about the way we think about Client Acquisition. The cornerstone to client acquisition is really thinking about wealth transfer and then getting more new clients at their peak accumulation years.
(03:15)
So that really gets us to the bottom for things on the slide. And for those in the back, it is about modernizing Technology and digital tools, attracting and hiring talent, building customized portfolios and having diverse teams. And those elements really surround getting to know your clients. The fundamental rule of our industry, which is know your client rule, but I would say it is on steroids and it is beyond risk tolerance. It is understanding what do they want. It is understanding why do they want it, how do they want it, and from whom do they want to receive it. And if you can match your practice and align it to the needs of your future clients, you are going to pay a lot of inroads. And so if you invest in these bottom four items, it will actually unleash the opportunities for attracting new clients. And we will talk about that more thematically over the course of our time, but it is definitely an investment of time that one should consider as they are evaluating their practice.
Michael Moeser (04:13):
Well, in terms of acquisition priority by segment, and we had a whole bunch of other segments on this chart originally, and I think what, when Joy and I looked at this, it was very interesting in terms of what are the top priorities? And if you look at high net worth clients today was the number one or is the number one priority, and it is at roughly a two to one level over younger investors. And I really have to ask the question here, is it an either or type of question? Do I as a firm, do I as an advisor say pick option, the high net worth client or option B, the younger investor.
Joy Crenshaw (04:51):
I am inclined to say it is C, which is both. The reality is you can have both because younger investors are fertile ground for the inheritors of your future, high net worth clients. And so it is important to nurture both. I actually think we should change the narrative. I do not really like the concept of younger investors because it puts in a box. We should really think of them as our future high net worth clients. And if we make that change, that mindset, mindset change, what kind of behavior changes will follow. I think there will be a lot, but you may not be as encouraged as I am and because you do not have the new research that we have, so I have a little prop here, and Nuveen did a study, a proprietary study on the trends of inheritor trends. And what we found is something that was very encouraging, actually very empowering for financial advisors and really flipped the script on a narrative that people will fire their family advisor. And we are finding that things have changed and that is no longer true. In fact, in the study that we conducted, we found that 64% of inheritors actually stuck with their financial advisor.
(06:01)
64% and then that number shot up to 80% when they were introduced as a child or as a teen. So they are a fertile ground, they are great opportunities and they are your potential new clients, and so they are definitely worth the investment of time.
Michael Moeser (06:18):
Well, that is a great segue to our next section wealth transfer strategy. So when we asked advisors in terms of wealth transfer strategies, one of the questions we had, do you have a wealth transfer strategy? And we are going to actually define that in the next couple of slides. What is a wealth transfer or transition strategy? We asked them about the biggest perceived growth opportunities overall about two thirds said it was a new client acquisition and then it followed by a generational wealth transfer. Now that rose up to almost to be tied with first place if you or your firm had a wealth transition strategy in place. And I guess Joy, really the question here is, given that we are talking about a 73 trillion wealth transfer, something that is already started in the last couple of years and it is going to go on for the next 20 years, does not it seem odd that general generational wealth transfer is second place? Should not this be higher?
Joy Crenshaw (07:19):
Yeah, so when we think about new client acquisition, it was listed as both the greatest challenge, but it is also the greatest opportunity. And we should think of these first two categories as working hand in hand because wealth transfer is really the fuel for the opportunities in client acquisition. A lot of times we get stuck in time, and I know myself as well and I think of millennials as being young and broke. No offense to any millennials in the room, but that is just not the case anymore. I mean, the oldest millennial is 42 years old. We think about generation X, the greatest generation that the oldest one is 58 years old. So we are really talking about people who are working, they are CEOs, they are running businesses, they are senior leaders of firms, so they are building wealth, accumulating wealth, and they are ready to inherit. So do not rely on the old narrative that they do not want to work with you when they broke that they do, but you have to make some intentional actions to make sure that you are meeting their needs and working with them in the way that they want to work with you.
Michael Moeser (08:19):
So they are not only the future high net worth clients, but they already have money, have access that they can use to invest.
Joy Crenshaw (08:26):
Exactly, time changes. So as we get older, so and so we need to be taking them seriously because they will be inheriting a ton of money and earning their own money.
Michael Moeser (08:37):
Well, let us dive into this wealth transition, the wealth transfer strategy. One of the questions we started out with is do you have a wealth transition strategy? And two things pop out here. The first thing, when you look at the colors and the bars, clearly firms with a billion or more in assets are more likely to have wealth transfer strategy compared to smaller organizations, less than a hundred million at 42%, 57% overall among all the firms that we interviewed. That is the first thing. The second thing is there is a lot of white space here in terms of firms not having a wealth transition, wealth transfer strategy. It feels like there is an opportunity there.
Joy Crenshaw (09:25):
Certainly is and the good news, actually, this is my favorite slide, and it may be silly because it actually does not have a lot on it, but it actually has three different things.
Michael Moeser (09:34):
Those are the best slides.
Joy Crenshaw (09:35):
It does because it allows you to say whatever you want.
Michael Moeser (09:38):
Exactly, make up the narrative.
Joy Crenshaw (09:41):
We can make it up, but it is in truth.
Michael Moeser (09:42):
Especially at this time of the day.
Joy Crenshaw (09:45):
But it is faked in truth though, so we are not just ramming stuff down your throat, but it is really three things that I take away that there is good news, there is great news and even better news. And the good news is that it is not too late to implement a comprehensive wealth transition strategy. So those people who have it, there is still time and also firm size is not a mitigating risk factor to your success. So regardless of how big or small your practice is, you still can be successful, but you do need a strategy and not just a plan. And we will talk a little bit more about that. And you need to is that.
Michael Moeser (10:24):
I do not know, we being yank like Tony.
Joy Crenshaw (10:26):
To the Oscar get off the stage. We still have 20 minutes on the timer, but you do need to make sure that you have intentional actions with your strategy to make sure that you are targeting the clients appropriately. So that is the good news. The great news is that investors and future inheritors do want to work with you. So I mentioned our study. I know I am like over celebrating it here, but it is so important because it really gives opportunities for advisors to think differently about the way that they engage with younger investors. And so it is still an opportunity to create a wealth plan and they want to work with you. In our inheritor study, we found that 87% of inheritors went on to work with their, or plan to work with their family advisor at the time of transfer. So this is a great opportunity and when you have one in place, it will really set the strong foundation. And the last thing is we would not do research without actually coming up with a process to help you. And so Nuveen has.
Michael Moeser (11:31):
I was just going to ask that question.
Joy Crenshaw (11:32):
Of course. Why would we sit up here if we did not have a way to partner with people? And that is really the generational intelligence quotient and we call it the Gen Q. Okay. And it is simply an online tool that allows you to very simply enter some information and it spits out some actionable steps that you can take to make sure that you understand where you are on that multi-generational wealth transfer, and then point you in the right direction of intentional actions to help you convert those, what we used to call younger investors to now future high net worth clients.
Michael Moeser (12:06):
HNF/HNW, I guess.
Joy Crenshaw (12:10):
Exactly. Alright, another acronym for our business we probably do not need anymore, but go with it.
Michael Moeser (12:15):
Well, let us talk about the definition here. I think we have talked about wealth transition, wealth transfer, and these slides are also available for everybody taking pictures, have these slides as part of the session. But when we asked advisors, do you do this, that and the other in terms of transition strategies that we thought would be worthwhile understanding it, it really only seemed that when you got over 50%, that 50% level people were doing estate planning guidance and tax strategies. And we sort of thought that might be the basic foundational, but we found a whole host of other activities advisors and their firms are doing from financial literacy, etcetera, etcetera. We saw that as more of a comprehensive perspective and Joy. Maybe could you talk about this in terms of the basic versus the comprehensive?
Joy Crenshaw (13:09):
Yeah, I think why do not we do a little audience poll here. So raise your hand if you work for a firm or your firm provides estate planning guidance. So just raise your hand. Okay, keep your hand up if you provide tax strategy. All right. And then keep it up if you offer financial literacy education and family meeting facilitation and value-based legacy planning. So a lot of the hands have started to go down. And then inheritor stewardship skills. I think there is one hand I see.
Michael Moeser (13:45):
They are thinking about it over there.
Joy Crenshaw (13:46):
Yeah, there is one hand for inheritor stewardship skills, and really this is important because it helps us to establish what a comprehensive wealth strategy means. So when you ask a question without a definition, it is subject to interpretation.
Michael Moeser (14:03):
So sure, I have one.
Joy Crenshaw (14:04):
Right? I have one. But we would actually say that as time has shifted that we need to think about what that actually means because estate planning, guidance, tax strategies, legal and risk mitigation are more commonplace today. And so we think of those as a plan. So most people have a plan, but when you start to move to strategy, and it was actually indicated in the room today as more hands went down, you need to start adding those things on the right, which is starting with financial literacy education all the way through inheritor stewardship skills. So a comprehensive plan would encompass all of those elements. And so when we think about what clients are asking for, a spectrum group did a study and found that 96% of clients expected wealth advice during their lifetime, but only 24% received it. That is a significant gap between what they are expecting, what they are paying for and what they are getting.
(15:02)
So high net worth relationships want more. They have legacy goals, they have philanthropic goals, they need you to help them on that journey. And so when you are engaging them, it is really important that you start interacting and providing advice and services around those things. They want things on family governance, they want things on mission statement, they want assistance on all the things. On the right to the slide, I think about my own situation. And another one that is not on here is actually elder care. So as we have talked about an aging client base, people are getting older, they need assistance. And this is something that hit me like a ton of bricks. So one day my dad was living independently and I was helping him on the fringes. The next thing, I am rushing him to the hospital and 10 days later I am told he cannot be released except to me or to a nursing home. So significant. And by the way.
Michael Moeser (15:56):
Those are tough situations.
Joy Crenshaw (15:58):
And I had two days to decide, oh my gosh, changed my life or changed my life. I mean, those were the two options. It was just a different way that I was going to be changed in my life. And so immediately I was thrust upon making medical decisions. And these were complex. He had congestive heart failure, he had dementia, he had cancer, all hitting at wow. As well as high blood pressure. I had to make all his financial decisions moving him out of his home.
Michael Moeser (16:23):
So you are saying that is really, that should be also, I mean we have only got what, six things here on this slide, but the comprehensive strategy from what I am hearing you say is that it is actually more the list could go on.
Joy Crenshaw (16:36):
Like estate planning and tax services are good, but they are table stakes. It is the things that people are not prepared for that they need your help with. And those are usually going up and down, it is parents and it is children, and it is how do you transfer wealth? How do you leave a legacy? What do you want to be known for? And that is where you can add incremental value into the practice. It also allows you to build deeper and more meaningful relationships, not just with the current generation, but also with the next generation. And then finally, everyone raised their hand theoretically on the estate and tax planning services side in this room, but let us just go to the slide. 88% said they offered it in 77. So how do you differentiate yourself from everyone else in the room? Everyone else in the advisory practice universe, you do it by the things on the right. So these are definitely important things to spend time on and it helps align your practice with the needs of the clients.
Michael Moeser (17:34):
And I guess to your point earlier, it sounds like being proactive because I think you said that only about 20-25% actually received it, yet a high percentage want this type of service being proactively provided to them.
Joy Crenshaw (17:50):
Absolutely. They want it to be proactively provided because you do not know when it will happen. I did not wake up one day and think, oh, my dad's going to be moving into my house in two days.
Michael Moeser (17:58):
Life is topsy-turvy just.
Joy Crenshaw (18:00):
Right. And all the time that I spent trying to make decisions, Googling and researching the implications of my decisions could have been spent actually spending time with my father in this last couple years of life. And so if I had somebody to help me with roadmap that was decisions, it would have been a better experience for both him and for me. But I did not have that guidance. And no offense to my financial advisor, I did not have one at the time, but if now I do have one, and if I was ever in that situation again, I would want them to help me navigate it because they should be able to help me connect me with resources and a decision tree that would help me understand, here is the impact of the decisions that you are going to make financially and beyond.
Michael Moeser (18:42):
Last year removed my mom and assisted living and Joy, I got to tell you, there is no roadmap, but let us talk about the roadmap with younger or future high net worth clients. So in asking about transition strategies, we asked advisors with a wealth transition strategy, how are you actively engaging with younger clients? And I think one thing sort of pops out from this slide. As a research guy, what I see is that you only have two things that are really over half of the audience. So there is no dominant theme. This is the silver bullet. I am doing this investing in digital tools, inviting younger family members to relevant meetings. And so really those are the top two. But beyond that, there is a host of other things, and I really want to get your perspective. Joy, what are your thoughts on this?
Joy Crenshaw (19:36):
Well, when I think about this slide and connecting with the next generation, you have to appeal to their sensibilities and you have to meet them where they are. And that is so important, engaging the future, high net worth client base. And the other thing about this slide is it is really kind of easy to implement. I am not saying snap your fingers easy, but relatively easy to implement. So what are some people doing in the field? we have heard success stories of financial advisors partnering with local colleges and universities and developing internship programs, which is a great way to get people on board to help with some of these things. I actually had to do a fundraiser recently myself, and I asked my daughter, can you create a fundraising campaign? And in 24 hours she had something on social media, it would have taken me weeks to do it. And that is exactly the type of thing that interns and younger generations are doing is really helping advisors and their firms build up their social media presence and increase their digital presence.
(20:38)
The other thing is that they are doing is providing relevant content and making sure that content is topical and is delivered in a way that is important to them. And so this is really important. One of my colleagues and I were just talking about how she started to receive information through TikTok, and we have been as a firm thinking about how do we talk about financial concepts in relatable, snackable ways? And TikTok is definitely rising beyond some of the challenges that we see in silly content. There actually is a professional medium for that. And so making sure that the content is relevant, relevant and digestible for people like them. I think another area that we are hearing a lot of success in is making content and making knowledge available in their life phases. And kind of getting back to an example, in my own household, I am a mother of all three of my children recently graduated from college in the last five to six years.
(21:35)
And so I can't tell you how many hours, it actually almost pains me to think about all the time I spent on open enrollment questions, what is this healthcare stuff? I was just on your plan all this time. Well, not anymore, so let us talk about it. We talked about 401K. So how much money should they be contributing? What are the investment choices that they have? Should they go into a glide path or should they allocate outside of it? They are making money. Of course, there is a fictitious amount of things. They think that they are like rich all of a sudden until they start getting their rent checks, until the bills and the mortgage payments. But thinking about spending plans and budget management, some people are paying off college loans and then they are also trying to buy a condo. So all of those things are important to people in the younger generation who are just starting out their career.
(22:26)
And then finally, my oldest daughter changed jobs, so now it is about the rollover. Do you keep it at the previous employer? Do you move it? Do you transfer? Transition it to an advisor or robo? And all of those decisions are real. So if you can provide content to them in a very digestible way, that is going to be important. And one final thing, taxes, right? That is something that I think none of us probably under, well, maybe there is some people here who understand taxes, but most people do not truly understand taxes. So it is a little bit of game of making sure you are not overpaying or underpaying, and that is something that people need help with. So providing three quick tips on taxes around that time and how you can save and mitigate or not overpay that will be very helpful for this generation. So younger advisors is another way that people are investing.
(23:15)
And we have a whole slide in our generation in program talking about how rookie advisors are being deployed with financial advisor firms, and we would be happy to talk to you more about that during our booth time. But I would just say that in addition to bringing in younger advisors, we can also typically help, typically help with things like digital and social media presence. They will bring in a referral base because they have friends and families and people that they network with that are in that demographic you could tap into. And then finally, it is a great place to tap into other entities like community organizations. So we see advisors partnering with programs like Invest in Girls, which is a great program that works with schools and communities to help increase financial literacy within the female population and then transition to careers within finance. So there is so many different ways in which firms and advisors are using interns using younger generations to help with these. But the important takeaway is that you have to use them because this is how they consume information and this is how they are going to get information about you and your practice and make a decision about the connectivity and the value you will provide.
Michael Moeser (24:31):
It is interesting, back to the very first slide where we talked about the top three challenges, and at the bottom of the level was modernizing the practice, the digital tools, attracting, hiring talent, diversity in the workforce. Clearly these are showing up here as key things that people are doing to communicate to the future high net worth, AK younger clients.
Joy Crenshaw (24:55):
So I think, and it is just really important that people do not think about it in such a bespoke ways. It is not about just new client acquisition as a standalone thing. All of these things wrap together. So the more you invest in these elements, the more client acquisition will become unlocked for you because wealth transfer next generation clients is really important. And my colleague who is actually sitting in the back, Barb actually said to me, she was like, the reality is what do you want more old clients, more new old clients? Is that what you really want? And you do not, because that actually adds more client base risk. And I call that book risk. So you have to counterbalance that with the pipeline of younger investors and they are ready to work with you, but you got to invest in these tools to help make sure that you are attracting them in the way that they want to work and engage.
Michael Moeser (25:49):
Well, let us talk about portfolio preferences, because I think the age demographic is a very important one, and clearly there is different needs for different age demographics. Joy, what is your thought or Nuveen's perspective on this slide? Because clearly Crypto has a play here, but all the other assets do as well.
Joy Crenshaw (26:11):
Yeah, I mean, the big thing is that client acquisition methods are changing and so are portfolio construction conversations. And so you as an advisor need to make sure that you are evolving your conversation and be able to facilitate conversation in asset classes in investment opportunities that may not be top of mind for you or for your current client base. And what this chart really shows us is that those individuals who are 26 years and younger have a strong appetite for Crypto and alternatives and ESG and that those numbers change. The Crypto one goes way to the bottom when you start talking about 70 years or older. And so the good news is that the younger generation, the next generation is hunger for advice and they want education. We found that in our study, they will Google and search and talk to people about things like Crypto.
(27:09)
So that is not the question. It is really how do I implement it? And I have reflecting on upon a conversation I had with my daughter who is now actually entering into this business and learning about investment options. Oh, fantastic. Yeah, I mean, that is something following in my footsteps a little bit. That is good and scary at the same time, but hopefully she will take the good and leave the bad. But the key takeaway was that she actually just randomly called me and was like, mom, talk to me about Crypto. And I am like, Google it. That is what we do to find every question, answer to every question,
Michael Moeser (27:43):
Great advice from mom.
Joy Crenshaw (27:45):
And she was like, I know what it is. I want to know should I be investing and how should I be thinking about it and at what level? And oh, well, I am at work right now, so that is not a question I can talk about. We will have to table that for another conversation. So fast forward, I am talking to my financial advisor about a week later, and I mentioned this conversation and she says, I would be happy to talk to her. And I said, okay. And they had a conversation and it went well, and she got the information she needed, and then she called me and said, you know what? That was a great conversation. Should I start working with Lisa? Oh, fantastic. And I said, oh, like, well, you do not have the investment minimum yet. You will, you are building your own wealth. But that is a good conversation to have about what are the future prospects of your investment or your advice.
(28:31)
And it is a great way to think about how you are planting seeds with that next generation of wealth inheritance, because Lisa was not just thinking about her as a client today. She was thinking about anything that hopefully I will have a nice next egg that I can pass along to my three kids. So they are the future high net worth clients that she needs to take in consideration. But one quick thing, I want to make sure that we do not get caught into this being about Crypto because everyone has different opinions about it, whether it is thriving, whether it is dead. You know who, that is not my point, right? The point is that the investment appetite, the risk management, and the risk options that different generations have vary. And so you do not want to be dismissive. That is the worst thing you can do. You need to have a conversation about it. And Crypto could be a proxy for something else in a year or two, but you need to expand what you are conversing on. Yeah.
Michael Moeser (29:26):
Let us go into our last section here. Technology tools advisors are reporting, they are leveraging Technology to help them with advancing goals, particularly as it relates to tomorrow's high net worth clients. Joy, what are your thoughts, Technology, and what role can it play in attracting those future high net worth clients, particularly as they are positioned to inherit wealth from mom and dad?
Joy Crenshaw (29:53):
The important thing about Technology is that you use it to, to use it at scale. Got it. Technology will be a critical factor in driving both scalability as well as profitability going forward. So we are not saying just triple down on all of these things. You have to do it in a measured way because profitability will be an eye for how you do that. But one way that people are using Technology is really in terms of a client service model that needs to be tiered. You can not provide the same level of service to every single person, but Technology can create automation and expand your reach in such a way that will help you. And our research is finding that people are not prospecting as well as they could. And so Technology can really help do that. It also allows you ways to promote yourself. And when I am thinking about who I am going to meet with and someone who may be driving a lot of decisions that I am going to be making, I am going to do my research.
(30:49)
And so people are going to research you. They are going to Google you, they are going to look at your LinkedIn, they are going to look at your right, your team plan, your team webpage. And so what are you telling? What story are you telling? Are you going to be connecting to the type of client that you want to attract? Or are you going to be attracting the type of client you are already working with? And people will have an impression and a perceived value before they even meet with you. So it is really important that you look at what message are you conveying and are you conveying that of one of a trusted partner or someone who is just said in a certain way, right? That is not willing to evolve.
Michael Moeser (31:22):
I guess, your option C, covering both bases. Exactly. So I guess as we wrap up here, Joy, any final closing thoughts for the audience that you would like to share?
Joy Crenshaw (31:32):
Well, client acquisition is definitely a can be a challenge, but it also is a greater opportunity when you pair it with the Great Wealth Transfer. And Nuveen is here to help. We have a ton of tools available to you between the generational intelligence quotient that will be launching next month. We also have the inheritor research that I have here, and we have some in our booth, so we want to be a partner with you on the journey. And I would just encourage you at the break to find me, find another Nuveen representative to talk about how we can partner. The second thing is that we just tip, we just talked about the iceberg or just started talking about this tip of the iceberg conversation of tip of the iceberg. Sorry. That is all right. Tip of the iceberg. And between your firm and our firm, there is a ton of more research that will be made available. So I believe the entire study will be available on financial planning next month, next week.
Michael Moeser (32:22):
I believe so, yes. Next week, yes.
Joy Crenshaw (32:25):
So go to the website, learn more, come to nuveen.com, we are happy to help. And then third, there is a lot of money in motion. And so it is important.
Michael Moeser (32:33):
73 trillion.
Joy Crenshaw (32:34):
Not million, not million, as you said, it is with a trillion. And so $73 trillion are in motion. And so it is yours to keep or it is yours to lose. It is all about what intentional actions you make, but I think you can do it, and we are here to help.
Michael Moeser (32:49):
Well, Joy, thank you for being part of todays session and the audience, thank you for your participation and listening. So thank you.