Expert: Warwick Bloore, Senior Investment Specialist, Vanguard Facilitator: Paul Miles, Silverback Consulting
Headlines:
- The challenges and opportunities surrounding the transfer of wealth from older generations to younger generations, particularly in the context of the UK market
- The role of financial advisers in facilitating smooth transfers, and strategies for engaging with next-generation clients
- The importance of diversity in advisory teams, and the potential need for innovative products or services to address this issue
Discussion points:
The significant amount of wealth expected to be transferred in the UK over the next three decades, estimated at £7 trillion, which is seven times the amount of assets currently being advised was emphasises along with the importance of learning from Vanguard's experience in the US, where they faced challenges related to intergenerational wealth transfer and the loss of assets due to a lack of engagement with the next generation.
The Great Wealth Transfer and its challenges
The 30% of the UK population are baby boomers or older, but they hold around 70% of the wealth. This wealth is expected to transfer at a rate of £100 billion per year over the next 30 years. The reasons why wealth is often lost across generations includes a lack of communication, failure to prepare heirs, and family dynamics.
The role of women as dual inheritors and the potential challenges advisers face in engaging with both partners in a relationship was also addressed.
The role of financial advisers
The critical role financial advisers play in facilitating smooth wealth transfers and the importance of engaging with the next generation at the right time and tailoring propositions to cater to current and future generations was highlighted.
The need for advisers to have difficult conversations, navigate family dynamics, and provide emotional support to clients. The discussion also touched on the importance of diversity in advisory teams, both in terms of age and gender, to better connect with different generations of clients.
Strategies and solutions
The various strategies and potential solutions for addressing the challenges of intergenerational wealth transfer. These included segmenting client books based on factors like the number of heirs and the stage of estate planning, identifying triggers for initiating conversations about legacy planning, and positioning the conversation around education, tax planning, and preparedness.
The discussion also explored the idea of specialised propositions for accumulators versus decumulators and the potential role of product providers in developing innovative solutions.
Key takeaways:
- Advisers should assess their client base to identify clients who are part of the £7 trillion wealth transfer and evaluate their level of engagement with partners and next-generation heirs
- Firms should consider supplementing traditional client segmentation methods with additional measures, such as the number of heirs and the stage of estate planning conversations
- Advisers should initiate conversations about legacy planning and wealth transfer, using triggers such as discussions around lasting power of attorney or changes in health
- Firms should explore tailoring their propositions to cater to different generations, potentially offering specialized services for accumulators versus decumulators
- Advisers should focus on building diversity within their teams, both in terms of age and gender, to better connect with different generations of clients
- Firms should evaluate the potential need for innovative products or services specifically designed to address the challenges of intergenerational wealth transfer
- Advisers should prioritize building relationships with the next generation of clients and positioning themselves as trusted advisers for legacy planning and wealth transfer
