Let’s start with a number, $124,000,000,000,000. 124 trillion … that’s the estimated amount of wealth that will be transferred generationally in the next 20 years. Some portion of that vast wealth is sitting in your financial institution. Ownership will get transferred, and year by year, more and more deposits and other assets will pass down via inheritance. My question is – what strategic steps are you taking to ensure that much of that wealth stays in accounts you control? It is no secret that young millennials and Gen Z are unlikely to adopt their parents (or grandparents) banking habits. They are fully digital and already familiar with cryptocurrencies and stablecoins. They have fully adopted P2P services like Venmo and CashApp and are not pre-disposed to go to a bank branch. They are thrilled with services like Robinhood, Chime and look for entertaining TikTok-like experiences online. However, the online or mobile banking applications that community banks provide may not match these banking habits. And yet, some 18-year-old Gen Zer (let’s call her Aimee) might inherit $50,000 in a couple of years. Let’s further stipulate that the $50,000 is in accounts at your institution. What are the chances it will remain there once Aimee gets this money? A recent article from the ABA Banking Journal provides an excellent insight to this important issue. One of the most important takeaways is the fact that bankers need to be paying attention to this issue regardless of whether they offer trust or wealth management services. I posit that if you had a sustained, strategic plan to inform younger existing or potential customers on basic money management that included instruction on how to manage receiving an inheritance, you would be on the road to having loyal account relationships that would continue to use your services. Let’s further document the status of the future customers you must attract and keep: Around the ages of 10 to 35 years old; Highly mobile literate; Knows how to execute online payments; Attracted by entertaining apps, appealing marketing campaigns; Downloads “free” apps but are eager to make “in-app” purchases; Does not represent any significant deposits (yet); Wants fully online / virtual experience but wants a local “office” in case they have an issue; Is seeking financial education and advice – due to little to no financial education provided in schools. How do you appeal to our fictional Aimee who has the traits outlined above? It depends on the type of bank and whether you offer specific wealth / trust services. You Offer Wealth Services – You have a trust department or have a relationship where an investment entity operates out of your facilities. You are in a perfect position to become the trusted source for a young person. Here are some specific strategies for you to consider: Hire Younger Investment Advisors – The average age of most wealth firms is 60+. Someone who is 28 and just inherited $50,000 doesn’t want to sit down with someone that resembles their grandparents to talk about money. You need to have younger advisors, at least much closer in age to the customers you seek. And stop shying away from employees because they have piercings and tattoos. The customers you seek have them too. Engaging Education – You need to have a comprehensive program of education focused on financial literacy targeted to younger customers. This means more entertaining, short-form, funny videos as the format. Engaging Apps – Get rid of the low cost, low functionality mobile apps you currently deploy and get apps that are highly functional and provide an experience that mirrors those to which young people already gravitate. Delayed Gratification – You will need to provide education that instills in a young person the concept of savings, compounding interest, and long-term financial stability. Think how eliminating one Starbucks coffee each day and invested instead grows into a house down payment or a kid’s college education. You Don’t Offer Wealth / Trust Services – Even if you don’t have any specific wealth or trust services, you would do well to carefully examine the list above and see if any of them make strategic sense. In addition, you might also offer some in-person education where those that have wealth to be transferred (i.e.: grandparents) could meet with those that stand to inherit their wealth (i.e.: their grandchildren) and participate in some joint knowledge / information sharing. This would allow for topics to be introduced / discussed that might be best handled with an interested third party to facilitate. The fact that a younger person might know that an inheritance is going to happen at some point but also armed with the direction that the wealth provider might want to share should encourage the younger person to get educated and be prepared to make good financial decisions, well in advance. The institution could partner with a local counselor to facilitate these multi-generational encounters. The availability of GenAI tools can also make the transition easier. If you are a regular reader, you have read my attempts to create an AI powered avatar that can serve as an advisor to young people. I think this works because it can be available 24 x 7 via the mobile device versus a young customer making an appointment to come into the branch. This “self-serve” model is highly desirable, but many banks prefer the “high touch” model. Nothing wrong with great in-person service but consider that the younger customers may not value that high-touch in the same way their parents and grandparents do. Times are a changin’ and as bankers, we must accept that our methodologies for thrilling and delighting customers will morph along with our customers. Aimee and her $50,000 need you. She just doesn’t realize it yet. It’s all about the customer experience and this issue of wealth transfer stands to be a crucial one for bankers to understand and master. Resources Getting ready for the great wealth transfer