The Multi-Generational Independent Broker-Dealer | WealthManagement by Gary Martino

Headlines are rampant these days about the pending generational wealth transfer from Boomers to Gen X and beyond. With estimates that $10 to 50+ Trillion (yes, we’ll capitalize “Trillion” – it’s a big number) are expected to cross the generational boundary waters, financial service companies are trying to figure out the best way to position themselves for what is forecast to be a three-decade-long event.

It’s our belief that this event will significantly impact the independent broker-dealer community, and probably not in a good way. With no discernible model currently attractive to young investors, there is a considerable gap between how IBDs will retain assets that make that generational leap.

As money ages, it typically gravitates toward a full-service relationship and all of the ancillary services that go with it (financial planning, estate planning, etc.). Conversely, as money transfers to a younger generation, data shows it tends to gravitate toward a self-direct model that younger, tech-savvy investors now prefer. As younger investors also typically don’t seek out an advisor’s value-added ancillary services, and most advisors are unable to provide a self-direct solution to initiate a relationship with the inheriting generation, it becomes apparent that independent investment professionals will be at a disadvantage in managing the generational wealth transfer.


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