THE NEXTGEN THREAT

THE NEXTGEN THREAT
A side effect of the next generation wealth transfer, for advisers in the financial services industry, the risk of getting client retention right has never been bigger. And this time around we are not primarily talking AI: Research firm Cerulli Associates proestimates $124 trillion worth of assets will be transferred between generations in the US through to 2048, with $105 trillion going to heirs (Cerulli Associates, Dec. 2024). Other western countries are in line.

Experience shows, that it is always crucial moments in life, that make investors change the companies they work with the most. In such events like business exits, the evolution of retirement, divorce or inheritance, when life changes completely anyway people tend to leave their comfort zone also with regards to their financial advisers.

This attrition threat is intensifying due to aging societies, technological innovation again a growing risk level in the financial sector underneath a sunny surface. But let’s look into the details.

From IQ and EQ to TQ
Advisers need to expand their skills into Transitional Intelligence:

• IQ (Technical) solves calculations but can't navigate identity shifts.
• EQ (Emotional) reads emotions but doesn't systematize solutions.
• TQ (Transitional) provides a framework for navigating the predictable patterns in unpredictable moments, securing the relationship when it is most vulnerable.

The TQ skill is not to be learned from books and seminars only, it is something that needs to mature like French wine or Scottish Whiskey, quality grows with age: You cannot authentically guide clients through identity reconstruction if you haven't navigated your own transitions.

Aging Societies
With a rising average age, the amount of assets inherited every year goes up as well as the average size of an inheritance. As Nextgens sometimes need to wait longer until they get access to wealth, their eagerness to change things may also increase. When existing advisers are identified with the old investment policy, their role is clearly at risk.

Technology
Nextgens are familiar with neo-brokers and ETF’s when now AI kicks in for investment schemes and strategies. This enables the new principals to do more things on their own and completely changes the role of advisers. Not all oft hem are capable and willing to adapt.

Mounting risk
The debate on the current outlook is very bipolar at the moment, inbetween a crash scenario and the goldilocks party there is does not seem tob e a lot of space. Without going into the details of risks embedded in securitized debt, rising public debt and a potential AI bubble, there is one thing that they all have in common: the party is now and next generations will pay for it, if things eventually go wrong.

Nextgens are aware of this pattern and tend to take different approaches to risk management, unlike there parents combining long-term views with short-term measure in order to ride the tide while still being prepared for storms to come. Alejandro Zichy, an experienced investor who embraces this risk management barble, just published his book Natural Stupidity: Why the Florida Real Estate Bubble, the AI Mania, and the Iran War Will Reshape America in 2027. He states that US public debt is not sustainable and even the stablecoin trick will not help.

Whatever the outlook is: Adivers whithout the ability to share the changing perspective on investing and risk management will loose assets. That is why the BeeWyzer Nextgen Masterclass matters: Adivers can offer it to clients, make the training journey together with them, bond with the next generation and foster their own Transitional Intelligence. Generational change always happens tomorrow, but we decide today how it will affect us as investors or advisers.