With more than $120 trillion set to be inherited over the next 25 years, advisors will face the dual challenge of helping clients set up estate plans while looking to retain the business of their next of kin. While those who expect an inheritance are more likely to say they want to maintain their benefactor's advisor, the eventual asset consolidation process could lead them to a different firm that better suits their needs. For advisors, leveraging existing client relationships while fostering productive cross-family estate discussions can help them maintain their incumbency advantage with the next generation, according to the latest Cerulli Edge—U.S. Retail Investor Edition.

Cerulli’s research finds 56% of affluent investors expect to receive an inheritance or have already received one. Millennial and Generation Z respondents—predicted to receive more than $60 trillion in the next 25 years—have the highest expectations of receiving an inheritance (44%), while 21% say they already have received one.

Expectations of an inheritance can be born from family discussions that have already transpired, with or without an advisor present. Though it can be a complex topic to discuss, it is crucial for advisors to engage the next generation in discussion early on. Clients meeting their benefactors' advisor for the first time at the inheritance stage are less likely to use the advisor for their own needs, even if the advisor understands how the family's inheritance structure was set up.

“The benefactor’s advisor has the advantage of having the first opportunity to establish a formal advice relationship, with the inheritance as an incentivizing factor,” says John McKenna, research analyst. “However, the window of opportunity for advisors to potentially extend their client relationship to the next generation is brief. Among those who expect to receive an inheritance, 27% say they would maintain an existing relationship with the managing advisor, but this drops to 20% among those who already have received an inheritance,” he adds.

Advisors will need to take the initiative with these heirs by encouraging clients to bring the family into certain financial advice discussions, particularly around estate plans. Scheduling one-on-one consultations or financial planning sessions can give these prospective clients a chance to see what a relationship with this advisor would look like—and potentially hire them in the future.

“Estate planning can be very emotional for families, and advisors can play a significant role in channeling those emotions into fruitful, empathetic conversations beyond just figures on an account dashboard,” says McKenna. “Younger family members who see that early on tend to remember the level of care shown to their parents, which can be a strong reason to maintain a future advice relationship. However, the care must be ongoing and proactive. Otherwise, clients may use the advisor for the inheritance transaction and then take their business elsewhere,” he concludes.