Unlocking the $31 Trillion Wealth Transfer: A Strategic Blueprint for Trustees
The next decade will witness an unprecedented transfer of wealth, with 1.2 million individuals passing on nearly $31 trillion globally, according to the Altrata Family Wealth Transfer 2024 report. For those in the trustee services industry, this represents a significant opportunity—and challenge—to ensure this transition is smooth, efficient, and aligned with clients' wishes.
Leveraging Mark Ritson's Holy Trinity of Marketing—Segmentation, Targeting, and Positioning—here is how trustees can strategically approach this immense wealth transfer.
1. Wealth Tiers: Following Ritson's concept, trustees may segment based on financial capability, ensuring that services are relevant to different tiers of wealth. This allows for a customized approach for each group, addressing their unique needs.
Very High Net Worth (VHNW): Individuals with fortunes between $5 million and $30 million. This group comprises 87% of the people transferring wealth but only 36% of the total value of wealth being passed on.
Ultra-High Net Worth (UHNW): Those with assets exceeding $30 million. Despite being a smaller group (13% of people transferring wealth), they account for 64% of the total wealth to be transferred. Within this category, those with $100 million+ are particularly significant, representing almost half of the $31 trillion wealth transfer.
2. Geographic Regions: By segmenting geographically, trustees acknowledge regional differences in wealth distribution and demographic characteristics, enabling them to provide region-specific solutions.
North America: Leading the pack, North America will see 46% of global wealth transfers, with 597,309 individuals passing on $14.1 trillion.
Europe: Expected to account for 22% of global wealth transfers, with 270,000 individuals passing on $7.4 trillion.
Asia: Despite having more wealthy individuals than Europe, it will contribute to 20% of the wealth transfers, amounting to $6.1 trillion, with a younger average age of donors.
3. Age: Age-based segmentation allows trustees to tailor their services to the distinct needs of different generations, from those currently holding wealth to the younger generation set to inherit it.
According to Altrata's report, current wealth holders are predominantly over 70, with the average age of those transferring estates being 75, and a significant portion being over 80. Generation X, typically in their mid-to-late 40s, are the primary heirs.
In contrast, Millennials and Generation Z are more likely to inherit from their grandparents, often resulting in less substantial inheritances.
Targeting: Prioritizing Efforts
With the market segments identified, trustees should target the most promising groups, focusing on segments with the highest impact and complexity to maximize results.
This means concentrating efforts on UHNW individuals in North America and Europe with $100 million+, as they will transfer the bulk of the wealth, and VHNW individuals aged 70+, particularly those with significant business assets needing complex succession planning.
Positioning: Crafting the Message
To effectively resonate with target segments, trustees must align their positioning with Ritson's principles, addressing the unique needs and values of each group.
1.For Wealth Holders: Trustees should establish themselves as authorities in succession planning and geopolitical strategy, directly tackling the primary concerns of current wealth holders and reinforcing their credibility and value.
Expertise in Succession Planning: Showcase the capability to manage complex global asset portfolios and ensure seamless legacy transitions.
Geopolitical and Economic Insight: Highlight a deep understanding, extensive experience, and adaptability in managing wealth amidst geopolitical challenges and economic fluctuations.
2. For Heirs (Generation X): By emphasizing stewardship, sustainability, and education, trustees position their services as vital for the next generation of wealth holders, ensuring they are well-prepared and aligned with modern values.
According to Altrata's insights, focusing on sustainable investment strategies and long-term financial stewardship will resonate with Generation X's values.
Additionally, trustees should provide tailored educational programs and advisory services to prepare heirs for their new roles. This support ensures future wealth holders are equipped with the necessary knowledge and skills to manage their inherited wealth effectively.
Actionable Insights and Real-World Examples
To implement this strategy effectively, trustees should consider the following steps, aligning with Ritson's actionable insights approach:
1.Develop a Meaningful x Actionable Grid: This structured approach ensures segmentation is both meaningful and actionable, enabling the development of targeted strategies. Identify key variables such as wealth tier, age, region, industry, and philanthropic interests, and use this grid to create distinct and actionable segments.
2. Leverage Valuable Resources: Using authoritative data enhances credibility and demonstrates expertise. Trustees should share real-world examples and testimonials through whitepapers, webinars, and workshops, providing tangible proof of their success. Highlight successful wealth transfers, emphasizing the complexities managed and the personalized strategies employed.
By adopting this comprehensive approach, trustees can make their services not only relevant but indispensable to UHNWI clients navigating the complex landscape of the upcoming $31 trillion wealth transfer.
