Kendra Thompson has a message for advisors: You may have gotten comfortable with your boomer clients, but get ready for some big changes when their children inherit the wealth.

Thompson, a consultant in Accenture's Wealth and Asset Management practice, authored a report titled The 'Greater' Wealth Transfer: Capitalizing on the Intergenerational Shift in Wealth. She estimates that between 2031 and 2045, 10% of U.S. wealth will change hands every five years, as baby boomers' assets shift to their children. Thompson's report puts the value of that exchange at a whopping $30 trillion.

Although the greatest impact of that transfer is still several years down the road, Thompson recommends that advisors begin to discuss wealth transfer plans with boomer clients immediately. That's not only a fiduciary best practice, but it can also ensure that assets remain with the advisor after the transfer takes place. For younger advisors in particular, it's crucial to identify Generation X clients and learn how their expectations may differ from those of their boomer parents.

Thompson says the attitude changes are already visible. Because younger generations are more comfortable using technology and assimilating various information sources to direct their own investments, advisors' value propositions have to change.
"That doesn't mean [this generation] doesn't expect advice, or that they don't value advice," she explains. "But the way we justify [the advice] needs to make sense to that group of people. Don't take it for granted that just because you have a business card or an office you can visit that they should be taking advice from you."

She says advisors should understand that younger clients are more open to virtual sources of information. Embracing that intergenerational shift, rather than fighting it, would behoove the industry.

Ramesh Gulati is chief investment officer at Gulati Asset Management, which has offices in Providence, R.I., and Vero Beach, Fla. His observations bear out Thompson's findings about the changing attitudes among Generation X investors.

He believes the cycle of extreme booms and busts in the housing and equity markets over the past 15 years, coupled with a spate of financial-industry scandals, scared much of the under-50 demographic away from the market. However, Gulati says there are ways to chip away at their resistance.

"I find that if you just deal with the parents, when they die and pass the money on, you may lose that client because you don't have a relationship with the children. You want to do multigenerational financial planning, so when that money passes to the next generation, it doesn't leave you. It's better to include the children so they know you, trust you, are comfortable with you, and first and foremost, they know you aren't taking advantage of their widowed mother or father," he says.

Jeanie Wyatt, CEO and chief investment officer at South Texas Money Management, with offices in San Antonio, Houston, Austin and Dallas, also sees a growing role for multigenerational planning. "It will make our business more complex, but also more successful, if we are able to incorporate and include the next generation or generations," she says. "In more cases than not, our clients like that. There's always a demand for privacy that you absolutely have to respect, but there's a keen desire for their heirs to be educated and informed so that they are prepared to carry the ball with those assets in the future."

In Durham, N.C., financial advisor Jennifer Lazarus tends to attract a younger clientele to her practice. She does not manage assets, but specializes in directing clients toward socially responsible investments. Most of her clients are in their 30s and 40s. That age group is not just focused on far-off retirement goals; they also want to be deliberate in how they employ financial resources in the present.

"People have heard the message of, 'You've got to save for retirement,'" Lazarus says. "But a pretty common theme is that it's not all about retirement. There is a lot of intentionality of how they want to be using their money now, but it's not all about the future."

Part of that shift, she believes, may be due to Generation X's expectation that they will be working beyond age 65. Lazarus often finds herself in the role of career coach, discussing with younger clients whether they enjoy their work. If they don't, she recommends that they seek something more fulfilling.

"That's a very different discussion," she says, "than you'd have with someone who is 58, and coming in to see if they can retire at 62, as they've always planned. In that situation, the discussion becomes: Are the numbers going to work?"

Advisors are also seeing changes when it comes to the role of women as investors. Many women find themselves managing their own or their families' money, since they tend to outlive their husbands or they may have gone through a divorce (though overall divorce rates in the U.S. have been dropping).

Gulati's client base includes both older and younger women. He finds that older women are educating themselves about ways to generate current income, keep expenses down and leave an inheritance for their heirs. Working-age women, meanwhile, are frequently tasked with care for elderly parents, as well as their own children. With female clients, Gulati says it's often necessary to take a different approach from the ones that have traditionally worked with men.

"The biggest thing is: Women want to know they can trust their advisor," he says. "They want to know: Do you understand me? What my fears are, what my concerns are, what I need to get done? And can you help me do that?"

In Albuquerque, N.M., Lee Munson, chief investment officer at Portfolio LLC, shares the view that advisors should focus more on the women's market. "Depending on what study you use, we now see 51% or more of the wealth in America controlled in some way, shape or form by women," Munson says. "This should come as no surprise, not only because women live longer than men, but they've also been coming up in the corporate ranks, albeit slowly. And when people get divorced, women get a chunk of money every time that happens, in most cases."

Munson says it's important to reconsider how advisors will connect with these women. "We've had a graying of this profession," he says. "Registered investment advisors, stockbrokers, people in the investment services industry. More than half are in their 50s or 60s or older. Stereotypically, it's accurate to say they are old, white men. In the past, their clients were other white guys. Now, more and more women are seeking financial advice, and find they are meeting up with their ex-husband's former stockbroker, who now calls himself an investment advisor-or a newly minted certified financial planner."

Munson's research has shown that many women are dissatisfied with the financial services options they are finding. One problem is that male advisors tend to be more interested in investing, and less attuned to developing comprehensive financial plans, which women are often looking for. To attract more female clients, he says, "The industry needs to stop basing client relationships on stock picks-should I buy Facebook or not-and base them on goals, objectives to be accomplished. It's difficult for a lot of men to learn how to talk to women about the financial landscape. Advisors have to admit there's a new facet they have to learn, and it's often challenging, but a lot of these guys don't want to do that."

The Hispanic market is another rapidly growing market that many advisors are not addressing. The Hispanic population in the U.S. is currently 52 million, according to U.S. Census data. That's 16.7% of the population. By 2050, it's predicted that Hispanics will constitute more than 30% of the U.S. population.

Louis Barajas, who runs Louis Barajas Wealth Planning in Santa Fe Springs, Calif., focuses on the Hispanic market. He finds that most Hispanics tend to invest in real estate, rather than traditional retirement plans. "That's a huge issue, and the financial planning industry can help Hispanics not only save money, but also learn how to invest it. But there are not a lot of people reaching out to this community, because there's the illusion that there are not enough people with money."

Barajas chose to leave a more traditional firm 21 years ago to develop a practice serving Hispanics. "The industry needs to understand that even if people in these communities don't make a lot of money right now, they can work with an advisor over the years to change the wealth of a family, the security of a family. My clients are willing to invest in financial planning, because it's a matter of priority for their families."

He also sees a need for younger Hispanics to become advisors, although he finds that new graduates are often unaware that it's even a career choice. "If the industry allows young kids of color to intern at their practices, it would be a huge first step," he says. Career-outreach events at schools would also help, he believes.

Kathy Shultz faces some related issues at her Beaverton, Ore., practice, Shultz Financial Planning, which focuses on recent immigrants and their families. Shultz herself emigrated from China, and understands that people from other cultures often view the path to financial security differently.

"The needs are the same, in terms of planning for retirement or for children's education," she says. "But there are some particular needs that are not addressed, that advisors are not aware of." For example, many new immigrants prefer whole life policies to term life. Although Shultz takes pains to explain that term would be, in many cases, more appropriate, her clients have frequently opted for whole life because they believe the savings component offers more security.

She says education is important to new immigrants, but they face language barriers. She has enjoyed success with Chinese-language seminars, but recommends that English-speaking advisors spend more time in one-on-one meetings with clients who may be relatively new to this country.

Many advisors might also be unfamiliar with cross-border financial planning. Most of Shultz's first-generation clients have assets in their home countries, such as real estate or business investments. "If advisors in this industry want to tap into the minorities market, they need to be prepared to plan across the borders. They will need to learn what investments clients have back home, and why," she says. She points out that the industry is beginning to wake up to this reality, and institutions such as the Financial Planning Standards Board are offering CFP cross-border certification programs.

Randall Eley, president and chief investment officer at the Edgar Lomax Company in Springfield, Va., also sees opportunity for the advisory industry in underserved markets. Eley has been a keynote speaker and conference sponsor for the Association of African American Financial Advisors. He doesn't yet see a big change in asset-management opportunity in minority communities, but believes that will change over time. "Education appears to be more available to Hispanics and African-Americans today than 30 or 40 years ago, so income ought to come behind that," he says. "Saving and investing those funds should come, too. So looking out over the horizon 20 or 30 years from now, I see money following the population." He notes that this is an opinion based on anecdotal observation, not statistical forecasts.

One change he sees already under way pertains to fiduciaries at public-sector and union pension funds, as well as employer-sponsored retirement plans at large corporations. "They serve markets where they have many customers and large streams of revenue coming from minority communities, as well as other communities," he says. "As a part of their public relations and marketing programs, they will tend to look for vendors, including among financial services firms, from those communities. Over the last 20 or 25 years, we have seen some positive developments. Not as rapid growth as some of us would like to see, but trustees are coming to realize that business should not be given to firms that are already the biggest firms."

While it's clear that there is plenty of opportunity ahead for the financial services industry as a result of ongoing demographic shifts, it's equally clear that many practitioners will miss out if they don't change their mind set. As Kathy Shultz says, "Things are changing so much now, but it's not in the comfort zone of many advisors. If they can branch out of their zones and reach new people, it may change the industry."