Richest Americans Getting Richer, Offering Big Opportunity, Lumia Says

The richest Americans are accumulating more wealth than at any time in history and are expected to pass trillions of dollars onto younger heirs, says Vincent Lumia, head of field management at Morgan Stanley Wealth Management.
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“The pie is going to get bigger and the amount of money that is changing hands is changing at a rate we have never seen before,” Lumia told a sold-out crowd of 1,000 financial advisors attending the Forbes/Shook Top Advisor Summit in Las Vegas.

“You should all be very excited about what the next 5 to 10 years is going to bring regardless of what is happening in the day-to-day markets,” Lumia said.

Forbes reports that the 400 wealthiest Americans are currently worth $4 trillion, a drop off $500 billion over 2021. The overall trend, however, has been toward the rich and ultra-rich accumulating more wealth.

Cerulli Associates predicts $84 trillion changing hands between now and 2045. The baby boomer generation will transfer the biggest portion of that sum – an estimated $53 trillion. The balance will come from older generations.

Lumia disputed the assertion that the wealth management business has not changed or been disrupted during the past 20 years. The industry was once focused on brokers who sold stocks and bonds held in a portfolio, he said. The brokers were paid a fee based on each transaction.

Today, financial planning and portfolio management have become the backbone of wealth management. Advisors collect a management fee and are often the most important people in many clients’ lives. They have become the person clients turn to first when a problem arises.

“The irony is while they pay you for the asset allocation and investment allocation, a lot of the value that they place on you happens to be on things you cannot invoice them for,” Lumia said.

One area where advisors can excel is by coming up with a way to differentiate themselves in the marketplace by offering alternative investments (i.e., private equity, private credit, hedge funds, real estate).

Lumia said Morgan Stanley has “a very large alternatives business and that continues to be one of the more distinctive ways our advisors are differentiating themselves.”

Lumia said advisors face a watershed moment to substantially grow their businesses. He urged them to get prepared for the challenges ahead.

“I would ask you to reflect on whether you have the right expertise on your team,” Lumia said. “Do you have the right operating model to put this money to work? Can you keep up with it?”

Lumia said the most successful business models are led by people but also leverage technology. The goal is to spend more time servicing clients.

Lumia added: “We have to work harder, work smarter and run faster.”