Intergenerational wealth transfer: A business opportunity for advisors

01 May 2019 by National Bank Investments

The biggest intergenerational wealth transfer in Canadian history is taking place. Here are some facts and tips to help your clients and position yourself in this burgeoning market.

Intergenerational wealth transfer in Canada

Myth 1: Millenials will mostly inherit it

The reality looks more nuanced:

› Canada’s average life expectancy has climbed to 82 years3

› the number of people aged 85 and older is growing four times faster than the population as a whole4

As a result, it looks like the next generation, namely their children aged 50 and older, will inherit a good share of that wealth. The good news is that a large proportion of these future heirs already do business with financial advisors. For instance, 65% of Ontario investors aged 45 or more seek professional financial advice5.

Myth 2: Inheritors will do business with you

These research findings seem to suggest this isn’t necessarily the case1:

For an advisor, establishing a relationship with the inheritors is therefore key to ensure both a successful wealth transfer and business development.

Multigenerational potential

Here are some strategic questions to start talking inheritance planning and initiate a generational shift in clientele:

› Have your clients talked to you and their heirs about their inheritance plan? Does it include their financial assets?

› Are they aware of the tax implications of their inheritances?

› Are your clients considering giving their children a living inheritance? If so, do they retain sufficient assets to enjoy their retirement or face a market slide?

› What do beneficiaries plan to do with their inheritance?

Your expertise will provide them with quality advice, help cement your relationship and position yourself for the next generation.

Sources:

Investor Economics Household Balance Sheet Report—Canada 2017, Strategic Insight
Health-adjusted life expectancy in Canada, Statistics Canada
Life expectancy at birth (2016), World Bank
A portrait of the population aged 85 and older in 2016 in Canada, Statistics Canada
Investing as We Age—Key Highlights, p. 12, Ontario Securities Commission, September 26, 2017

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