By Steve Gresham and TJ Gresham
The Wealth Management Generation Gap
The wealth management industry is facing a pivotal moment. The Great Wealth Transition—a $100+ trillion shift in assets from older to younger generations—is already underway, challenging us with both the greatest growth opportunity in decades and the need to redefine our services[1]. And while much attention has been paid to the looming advisor talent shortage, the conversation must also expand to include how digital capabilities and self-service models can redefine engagement with NextGen clients[1]—creating the potential for a new generation of industry leaders.
The Talent Challenge: Shrinking, Aging And Underprepared Workforce
Nearly 40% of financial advisors, who collectively manage over $10 trillion in client assets, are expected to retire within the next decade[1]. The average advisor is now over 50, and only 11% are under 30, forecasting a projected shortfall of 90,000–110,000 advisors by 2034[1]. Compounding this trend, the industry faces a high attrition rate: between 72% and 90% of new advisors fail or leave within their first three to five years, with more than 72% of trainees dropping out before becoming full-fledged advisors in 2023 alone.
NextGen Talent + NextGen Thinking = NextGen Success
The barriers for new advisors are as much about perception and process as numbers. Onerous licensing, misaligned compensation structures and unclear career progression deter young professionals[1]. The traditional “eat what you kill” mentality and the expectation to build a book from scratch clash with Gen Z and Millennials’ desire for purpose, flexibility and collaboration[1]. The reality of today’s wealth management is that most advisors have been hired, trained and grown up in a culture of sales.
Many successful practices are taking their cues from the potential NextGen hires and realizing their existing approach to clients may also feel outdated to a rising clientele of similar age. Fee options and planning services made more accessible can start new, younger clients who don’t have significant assets to fund an AUM compensation model. Beyond simply matching younger advisors to younger clients, the new wealth management model is changing its look and feel.
The Great Wealth Transition: A Bonanza for NextGen Focused Firms
Powering NextGen organic growth of wealth management is the transition of industry assets. The $100+ trillion moving from baby boomers and the silent generation to Generation X and millennials is not a single event, it is most often a dynamic process that begins in most families with a life event impacting Generation 1. For example, an unexpected health event triggers the need to respond and draws in Gen 2/ Gen 3 family. Response by the advisor is critical—and the family is watching. Incumbent advisors often lack meaningful relationships with their clients’ heirs—and research confirms 70% of next-generation families and widows leave their parents’ advisor after inheritance[1]. This vulnerability is magnified at the margins of a practice where the tendency among aging advisors is to focus increasingly on the most valuable client households, leaving the “forgotten 80%” unengaged and at risk of attrition[1]. If the client and family are not fully engaged, they may not even contact the “advisor.”
These life event triggers—what we at NextChapter call The Moments That MatterSM—drive money in motion, and money in motion is responsible for two-thirds of new advisor hires. The ability to respond to the Moments is a new business boon to nimble advisory practices.
Digital and AI: The NextGen Engagement Imperative Is Also Good News For Profits
The rise of NextGen clients—digital natives with different expectations—presents a profound opportunity for the industry to redefine “wealth management” to a generation of clients who expect DIY options. Digital-first engagement, seamless online experiences, self-service tools and AI-powered planning are now the norm for younger investors[1]. Robo-advisors and digital platforms have commoditized basic portfolio management, and AI is automating compliance, surfacing client insights and personalizing advice at scale[1]. These powerful capabilities are actually preferred by NextGen clients—and NextGen associates—with important cost savings for advisory firms relative to the costs of human engagement.
But what of the human advisors? The good news/bad news is that while only a third of Gen X use financial advisors, both Gen X and millennial clients say they highly value personal service and consultation from a professional. The bad news is that they are not sure where to find those pros and are often at odds with advisor compensation models dependent on AUM (which they don’t always have).
In our experience, advisors combining digital tools with human advice—hybrid—increases client engagement fourfold compared to either approach alone[1]. By leveraging digital capabilities, advisors and firms can scale their services, reach more NextGen clients, and deliver personalized, on-demand advice that aligns with the expectations of younger investors[1]. AI-infused options are actually better and more reliable agents to track the myriad needs of family engagement across a practice clientele growing quickly with the introduction of G2/G3. Proactive offers can be delivered across more clients, allowing them to select items of interest and “ask your advisor about XYZ” becomes a driver of demand.
Why Digital Matters For NextGen Clients—And Advisors
• Scalability: Self-service models and digital platforms enable firms to serve more clients efficiently, regardless of geography or advisor headcount[1].
• Personalization: AI-driven insights allow for tailored recommendations and proactive engagement, deepening relationships with NextGen clients[1].
• Accessibility: Digital tools lower barriers for clients to access advice, fostering engagement with the “forgotten 80%” and younger, tech-savvy households[1].
Impact Play: NextGen Succession And Valuation
Succession planning remains a critical vulnerability when we look forward to NextGen. Only 20% of advisors believe their next-generation leaders can afford to buy their practice, and 25% of retiring advisors have no clear successor[1]. Without proactive digital engagement and succession strategies, decades of client trust and value are at risk.
Valuation measures are catching up to the demographic impacts. Consider the perspective provided by age-weighted revenues (practice revenues sorted by age of clients):
Industry averages peg revenue weighted client age at about 65 years with 81% of revenues earned from boomer and Silent Gen clients. Savvy buyers are reluctant to pay top dollar for an old and aging revenue base that doesn’t have a strong bench of younger clients.
NextGen engagement is fast becoming a priority for advisors and firms seeking future organic growth and sustainable valuations. According to a Fidelity survey of advisory practices, firms with revenue weighted age below 63 years have 20x the organic growth of firms where the age is greater that 69. And engaged families generate 1.6X the revenue and 2.4X the profits of G1 only clients.
Five Imperatives For Industry Leaders
1. Reimagine Talent Recruitment And Development
Expand recruitment beyond traditional channels and invest in mentorship, rotational training and clear career paths. NextGen employees can inject original, creative thinking—and can be internal champions for NextGen clients.
2. Build Digital Bridges, Not Moats
Deploy AI and digital tools to enhance—not replace—advisors, and train advisors to work alongside technology[1]. Digital tools leverage human associates, making them more productive and more free from mundane tasks. Leverage CRM for client experience “journeys” to augment human interaction.
3. Win The Family, Not Just The Client
Engage spouses and heirs proactively, and expand service offerings to include family financial education and support[1]. Make sure CRM and other service support capabilities can scale to meet the total demand of family engagement.
4. Reverse The Pareto Principle, And Mine The Forgotten 80%
Use digital tools to identify and engage less-active clients, preventing attrition and expanding the firm’s reach[1]. Add DIY service models including brokerage and ROBO to engage NextGen clients more efficiently.
5. Rethink Succession And Practice Management
Make succession planning a core part of every advisor’s journey and shift to team-based approaches for scalable growth[1]. Examine age weighted revenues and solve for sustainable growth in valuation. And remember that leadership won’t be replaced by AI – and we have to invest both our money and our focus to set the pace.
The Road Ahead: From Erosion To Expansion
The next decade will reward those who act decisively. While workforce challenges are real, they should not be the sole lens through which the industry views its future. Firms that invest in both talent and technology—and view NextGen clients as a catalyst for digital transformation—will be best positioned to thrive. The $100 trillion Great Wealth Transition, the rise of AI and the evolving needs of multi-generational families create a once-in-a-generation opening for growth[1]. The future belongs to those who build bridges—between generations, between humans and technology, and between today’s challenges and tomorrow’s possibilities.
Steve Gresham is founder and managing principal of NextChapter, a consulting firm driving organic growth of wealth management. TJ Gresham is a Gen Z business intern at NextChapter. See more at nextchapterinnovation.com and order your copy at info@nextchapterinnovation.com.