How CX Can Help Financial Institutions Retain Business During the Great Wealth Transfer

Here’s why financial services providers should build relationships with beneficiaries before they churn in significant numbers.

A massive generational wealth transfer is underway in the United States, and it’s expected to continue over the next 20 years as Silent Generation members, born between 1928 and 1945, and Baby Boomers, born between 1946 and 1964, pass along a staggering $84 trillion in assets to their next of kin. 

This phenomenon is being referred to as the “great wealth transfer,” and it’s a huge opportunity for the financial institutions that serve these populations — including banks, wealth and investment management companies, and annuities companies — to strengthen their customer experience strategies and retention strategies to not only hold onto the business of current clients, but also encourage client relationships with beneficiaries as clients in the future.

A majority of Americans (61%) say they would turn to a financial advisor for guidance if they received a large influx of money, but banks and wealth management advisors shouldn’t assume they will also retain those assets under management. In fact, the opposite is more likely to happen: data shows 80% of clients change advisors at the point of inheritance.

Given these high odds of turnover, it’s clear that banks, wealth and investment management companies, and other financial institutions could be doing more to build relationships with beneficiaries to gain their trust and increase the likelihood of retaining their business. 

But it’s something most aren’t doing. The vast majority of firms — 76% — only engage with heirs at the point of transfer.

Instead of focusing solely on retaining their current clients, financial institutions can gain a competitive advantage by adopting a long-term view of retention, with an eye on retaining current deposits and assets under management, even as money shifts hands to future beneficiaries.

To do that, FinServ organizations need to lean into customer experience — leveraging CX teams and tools — to gain a deeper understanding of the wants and needs of their current customers and their loved ones who are in line to inherit their account funds. These insights can best serve both parties in the lead up to and during the great wealth transfer. More than ever, CX teams that get a head start in investing in these areas have the chance to have a real business impact by preventing costly turnover and successfully retaining more of these high-value accounts. 

Let’s dive into what FinServ providers can start doing now to prepare for the next two decades of change as we enter the era of the great wealth transfer.

What financial institutions, bankers, and advisors can do now to influence future retention

1. Get to know the next generation of wealth management clients

Financial assets are often passed to a client’s partner before their children or other heirs, and because women in heterosexual couples tend to outlive their male spouses, American women are poised to control much of the wealth that Baby Boomers will possess by the year 2030, according to McKinsey. 

Time is of the essence for financial services companies: these McKinsey researchers found that 70% of women who inherit wealth leave their existing advisor within a year of their partner’s death.

FinServ organizations can’t afford to wait to get to know their new clients only after they’ve inherited money from a partner or loved one. They need to invest in understanding the different needs, preferences, and behaviors of these female clients and younger generations who are starting — and will continue — to inherit wealth over the next two decades now.  

For example, these widowed women may need a more sophisticated digital solution that allows their children to support remotely. And younger generations in general are likely to have higher expectations of the digital solutions offered by their banks and investment firms.

2. Understand the reasons beneficiaries typically choose to move their inheritance to a different bank or financial institution

Often, heirs shift funds simply because they have no loyalty to, trust in, or relationship with the bank, annuities company, or wealth management firm.

Perhaps they’ve been a joint account holder with a spouse, and they’ve felt overlooked or mistreated by the banker or advisor. They may have never heard of the company. Or, worse, maybe they’ve only heard bad things. They simply may prefer their own personal financial services institution, want to consolidate their funds, or need to transfer the assets because they live in a different location outside of the company’s service areas. 

Deeper insights into these potential future customers’ concerns, wants, and needs are critical to understanding these reasons for churn and to determining what banks can do to intervene and stop turnover from happening in the first place. 

3. For joint accounts, establish relationships with both parties

Make sure not to focus on one partner or the other, because prioritizing the primary account holder could lead to turnover when one spouse passes.

Banks can use digital behavior analytics, Text Analytics, and Speech Analytics to analyze customer interactions across touchpoints (including customer support interactions, website visits, and app sessions) to learn more about both account holders’ experiences throughout the lifetime of their relationship with the organization, and keep this information up to date on their user profiles to ensure all frontline and contact center employees have the information they need to personalize every interaction and strengthen these relationships with both parties.

4. Prevent churn by offering proactive services and support for legacy planning and wealth transfer 

While banks and financial institutions can’t directly reach out to beneficiaries, they can establish relationships with heirs by offering legacy planning and wealth transfer services and support, as well as encouraging existing clients to invite their heirs to take part in a strategy meeting, seminar, or luncheon or dinner.

Firms that offer tax advisory services can welcome their clients to include their heirs in a meeting about how to structure passing along wealth without tax implications. 

5. Cultivate relationships with beneficiaries over time

While banks can’t discuss their current clients’ financial information with beneficiaries, once they’ve established a relationship with an heir, using approaches like the ones discussed above, they can gather the individual’s contact information and keep in touch to let them know about other products and services the bank offers and to provide resources for managing an inheritance. 

The focus should be on demonstrating how the financial institution can be a partner and help the heir, building trust and transparency early. This can go a long way in transforming beneficiaries’ perceptions of the company and enable organizations to go from being unknown and having non-existent relationships with heirs to being known, trusted entities. 

6. Adapt your customer messaging and CX insights strategy for younger generations

While older generations may prefer phone and email communications, Millennials and Gen Z are more likely to prefer texting. 

It takes time for financial institutions to change their communication policies, procedures, systems, rules, and regulations, so it’s critical for customer experience teams to start getting buy-in and put a plan in place to evolve these practices now, while we’re at the start of the great wealth transfer.

On that same note, FinServ providers that rely on surveys for gathering CX insights need to adapt their strategy as well. With email-based survey rates declining — a trend that’s likely to continue as younger generations inherit accounts — it’s time to start using digital channels, such as SMS, live chat, and in-browser and in-app messaging, to be able to gather enough survey responses. But more than that, innovative banks are expanding beyond surveys, turning to omnichannel CX to capture customer signals across the entire customer journey, including from employee feedback, operational data, SMS and chat interactions, social media, digital behaviors, and more. 

7. Inform beneficiaries about your financial firm’s capabilities and locations

Get ahead of potential churn by using communication touchpoints with current clients and beneficiaries (once a relationship has been established) to educate both parties about the organization’s products, services, digital offerings, and geographic services areas, so heirs understand how they can potentially continue to be served by the bank, even if they live in a different region than the current account holder. Digital solutions and remote banking can help eliminate the need to be near a physical location and power money management from anywhere. 

8. Use customer listening technologies to anticipate life events

AI-powered Speech Analytics and Text Analytics can analyze conversations that bankers and wealth advisors have with their clients, the notes these employees take about their conversations with their clients, and operational and transactional data to reveal whether big changes are happening or coming up — such as if a beneficiary is getting married or divorced, transaction patterns have changed, the primary account holder’s health status has changed, or if they’ve moved from a home to an assisted living facility or been placed on hospice. 

These kinds of life events can impact the inheritance strategy and timeline, and listening thoughtfully during these important and sensitive moments can trigger banks to reach out proactively and personally. 

9. Make sure the right employees are engaging with clients at the right times

Banks and other financial institutions should establish a regular communication cadence with older account holders depending on the client’s preference — whether quarterly, every six months, or when significant external events such as a market crash occur. This is the opportunity to touch base about their client’s legacy and wealth transfer goals and plans as part of an ongoing conversation, rather than waiting for a life event to happen.

To truly understand clients at a deeper level, it’s critical for banks to capture and consolidate the feedback and insights customers provide across every one of these interactions.

10. Leverage CX best practices to retain the current client’s business and build a strong brand reputation

The current client experience plays an important role in influencing future client retention. Heirs are more likely to trust institutions they’ve heard positive things about from their loved ones over the years than if they’ve heard negative things or nothing at all.

Brand reputation and ability to deliver on the brand promise is particularly important for beneficiaries who may not have a firsthand relationship with the bank or financial institution, especially if the company has made missteps that have garnered negative media coverage over the years.

If that’s the case, the firm needs to communicate how they’ve addressed the root-cause issues of those problems or challenges from the past and be vocal about how they’re doing things differently now. 

11. Invest in the employee experience to make it easier for bankers and financial advisors to serve clients

Financial services organizations need to have the right tools and practices in place to be able to listen to their employees and gain insights into how to make it easier for them to deliver the best  customer experiences for account holders and beneficiaries. They also need to ensure their organization’s current policies and procedures aren’t a source of friction for employees or clients.

For example, when one wealth advisory firm implemented a new employee experience activation program, they asked their team, “What can we do to better solve customer and employee pain points?” They discovered that clients were frustrated with the firm’s emails — they weren’t timely or transparent. They crowdsourced solutions from their employees, and generated a lot of ideas about how they could potentially solve the problem. 

The highest impact suggestion? Adding another channel to their communications mix. They had been using email and phone calls, but what clients wanted were real-time updates. This inspired the company to invest in a secure texting service that employees could use to meet changing customer expectations around communications. 

12. Provide the appropriate resources and training for bankers and financial advisors to be ready for the great wealth transfer

Wealth management advisors who are experienced in having these kinds of nuanced legacy planning and account transition discussions aren’t the only ones who may end up interacting with beneficiaries during generational wealth transfer-related transactions. 

For example, retail bankers also need to be prepared to handle conversations with heirs who may come to a branch to close out their loved one’s account. These bankers need to be aware of what they can do or say to potentially retain the account, or at least ensure a smooth closing experience. 

Be mindful of legal limitations

As mentioned, banks and financial services companies can’t initiate any direct communications with beneficiaries listed on client accounts. These relationships must be established indirectly by encouraging current clients to invite their heirs to learn more about their bank or wealth management firm. 

Once the bank or financial service firm does have direct communications with a beneficiary, they can never discuss the account holder’s current finances, unless the beneficiary is in the room, on the phone, or copied on digital communications as these details are being discussed with the primary account holder. 

How banks approach customer experience today will determine their future success 

The great wealth transfer is a call to action for financial services CX teams to elevate their role and impact within their organizations. Now. If your company waits to take action until funds are passed on and the new account holders start taking their business elsewhere, you will already be behind.

Not having an action plan in place to retain current deposits is a huge financial risk because the amount of wealth that is at stake is going to have a significant — and global — impact on what banks, wealth and investment management companies, and annuities companies will be able to do across their entire organizations. Your customer experience team should be at the forefront of this planning, influencing key decisions that keep current and future client needs at the forefront of the conversation.

Looking to adapt your banking customer retention and experience strategies for the great wealth transfer? Our customer experience experts can help — let’s get started.