Intergenerational Wealth Planning

Financial Advisory

Emily Landless

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Many reasons such as DB transfers, property and longer life expectancy, mean that £5.5 trillion* will move hands in the UK between now and 2055. Savvy advisers need to start thinking today about how this shift in assets will affect their clients and their bottom line.

Headlines:

  • What your client bank would look like in 10 years’ time? Advisers do some limited analysis on this however not enough to paint a full picture.
  • Many current clients of Financial Advisers will fit into the ‘sandwich generation’ who need to support ailing parents as well as children who are not yet financially independent.
  • The sandwich generation are set to inherit from their parents with average inheritance expected to jump from £62,000 in 2017 to £91,000 in 2027.

Key issues and challenges:

  • We agreed on the importance of engaging with the children of current clients.
  • It was recommended analysing revenue, and revenue per client, by age bands, then overlaying estimated client mortality to estimate the size and shape of the client bank in ten years’ time. This was seen as a useful idea.
  • Research from the Bank of Canada asked ‘How comprehensively were you prepared for receiving wealth?’ to which only 0.02% answered that they had been introduced to the individual who would manage the wealth transfer.
  • Research from the Bank of Canada also showed that less than 10% relied on Financial Advisers to ‘support your children’s education on wealth and money’.  We thought this was disappointing

Conclusions and solutions:

  • There is not one right way to deal with the next generation. Each firm needs to find what suits them best from setting-up a mortgage arm with the specific aim of engaging with the next generation, to investing in intergenerational activity, for example, with new products, intergenerational mortgages, new technology, and so on.
  • A few encouraged family meetings with clients and their children to discuss particular financial issues.
  • One of the participants in the session gave an excellent example of how to engage with the next generation.  His firm put out a weekly, jargon-free financial information blog on Facebook, LinkedIn and Twitter.  This has now ‘gone viral’ and been viewed by 15 million viewers.

Expert: Mark Hayhoe - Russell Investments

Facilitator: Colette Dunn - Milliman UK


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