As baby-boomer business owners ponder the future of their companies, a great wealth transfer looms. That has Wells Fargo sharpening its focus on the opportunity to serve those business owners, from both commercial bank and wealth management angles.
Trillions of dollars of wealth is set to transfer to younger generations over the next two decades, and “about half of middle-market companies that exist out there will change hands, either to the next generation or an outside owner,” said Suzanne Morrison, Wells Fargo’s head of commercial banking and wealth partnership, during a recent interview.
With the “gray tsunami,” all baby boomers will be 65 or older by 2030, forcing aging business owners to evaluate whether their children – if they have them – are interested in taking over the company, and if not, what their alternatives are.
“We are talking with clients every day about that,” Morrison said.
Morrison works to bridge the San Francisco-based lender’s commercial bank and wealth units. Her team within Wells’ commercial bank works with the lender’s wealth and investment management teams, interacting with clients, leaders, relationship managers and financial advisers on a national basis regularly.
“Marrying those two is incredibly important, because they're intimately connected for the owner and for their family,” Morrison said of wealth and commercial banking. The bank’s commercial banking clients are typically middle-market and emerging middle-market companies generating between $25 million and $2 billion in annual revenue, and the majority are private.
Morrison’s role was created in early 2024 to sharpen efforts to collaborate between wealth and commercial banking, to more effectively deliver all the bank can offer clients. One of the keys to that is cultivating strong relationships with clients in both realms, she said.
“We measure our success based on the successful outcomes for our clients, deeper relationships with our clients, and new client opportunities identified through this partnership,” Morrison said.
As aging business owners assess their options for the future, Wells Fargo can bring its commercial and investment bankers, as well as its wealth advisers, into the conversation to assist clients. The endeavor is akin to the bank’s enhanced efforts to target the intersection of commercial and investment banking, seeking to snag investment banking business with its commercial clients.
It’s not one size fits all for those business owner clients pondering the future, she said. “Owners have an enormous number of alternatives, but filtering through which of those alternatives match against their personal strategy is what’s really important,” Morrison said.
In one recent scenario, a client’s four daughters hadn’t realized the value that had been created in the family’s company, and the bank helped them prepare for that wealth transfer and the responsibility that comes with that, from philanthropy to tax implications and strategy.
If clients opt for a generational change of hands rather than a third-party sale, Wells Fargo works with clients on “a plan not just for the business, but also the readiness for the next generation, to either come into wealth or be ready to lead the company,” she said.
As the bank seeks to take advantage of its size and expertise across units, spending time to advise and educate generations is crucial, whether that’s older generations on changing market conditions or younger ones on the long-term vision for a company, Morrison said.
“When you're only thinking about the business plan without the personal strategy, or you're only thinking of the personal strategy without all the business implications, there's a risk you miss the connection between the two, and to improve some of the outcomes,” she said.
Recent market volatility and uncertainty have caused clients to pause on certain decisions or investments, so the bank is engaging in more frequent contact with clients, she said.
“We think it’s a really good time to make sure that we’re increasing the velocity of our conversations with them,” Morrison said. “It’s not month to month, it’s week to week on different dynamics that affect someone,” and “nearly all clients we have will be impacted.”
Additionally, business owners grappling with dynamic conditions tend to be focused on their operations and professional success, “and they don’t always have the opportunity or time to focus on personal strategies as well,” Morrison said. That’s especially true lately with market conditions, she added.
In the current environment, Morrison said Wells is focused on advising clients to stay nimble while keeping their long-term plans in mind and considering implications on the personal side. “That challenge that we see is, how much time can a business owner spend on their personal equation?” she said.
