- 69% of advisers don’t have a plan in place to tackle one of the largest ever transfers of wealth due to take place between generations over the next 20-30 years.
- 52% of investors said that their financial adviser hadn’t engaged with the beneficiaries of their estate.
- Only 22% of advisers think they should have different sales, fee structures or marketing strategies for different generations.
New research published today by Octopus Investments*, an investment manager on a mission to invest £50billion in the people, ideas and industries that will change the world, shows that 69% of advisers don’t have a plan in place to tackle one of the largest ever transfers of wealth (the Great Wealth Transfer), that is due to take place between generations over the next 20-30 years.
A missed opportunity:
Alarmingly, this leaves only a third (31%) of advisers that do have a strategy in place for the Great Wealth Transfer. The Kings Court Trust estimates that the inheritance economy will be worth £5.5tn over 30 years, demonstrating the scale of missed opportunity for those advisers without a strategy in place.
Regarding asset loss in the event of a client death, almost half (46%) are concerned about losing these assets under management. In fact, 50% of advisers surveyed who have had a client pass away, estimate they have lost a range of £300k-£5m+ worth of assets under management.
According to advisers, the main reason behind not retaining the assets of a deceased client’s beneficiaries is that they believe beneficiaries would want to spend their inheritance (68%). However, for future plans, 79% of investors surveyed think that if they were to receive an inheritance, they would be likely to invest the money, showcasing a misconception among the adviser community and the significant value an adviser could provide to the next generation.
The lack of a multi-generational approach:
Despite three quarters (71%) of advisers thinking they have a sufficient approach to meet client needs across a range of life stages, on average, advisers are only dealing with more than one generation of their clients’ family with 16% of their client base. This missed opportunity was further emphasised when only 37% of advisers stated that they had a clear proposition for those under 30.
Whereas, over half (54%) of investors think that advisers should have different fees, sales or marketing structures for different generations. This increases to 73% when the question was asked to the 18-34 age group.
When asked about the difficulties they experienced in providing advice to this age group, almost half (48%) of advisers say this generation is less engaged or interested in their finances. A similar percentage (46%) think this generation doesn’t see the value financial advisers provide, and 38% believe this age group lack knowledge about finance. This further emphasises the disconnect between advisers and younger generations, and the work to be done in addressing misconceptions around financial advice. In spite of this challenge, only 22% of advisers think they should have different sales, fee structures or marketing strategies for different generations.
The importance of engaging with beneficiaries:
When we asked investors whether their financial adviser had engaged with the beneficiaries of their estate, less than half (48%) said they had. This lack of engagement by advisers is important to address, as 58% of investors think their beneficiaries would stay with their current adviser and 79% said they’d recommend their adviser to loved ones.
It is therefore surprising to see that 45% of advisers say clients do not see the value in bringing their beneficiaries into discussions around their finances, when on the topic of inherited wealth, 74% of clients said that it’s important for their financial adviser to help them determine with what to do with the money.
It certainly seems as though advisers have a role in facilitating these conversations. Though, advisers cite clients wishing to avoid giving up access to their wealth in their lifetime as a primary barrier to these conversations.
Jess Franks, Head of Investment Products, said:
“We are on the cusp of a seismic shift as the Great Wealth Transfer occurs in the next couple of decades. There is also a clear generational divide, both in how advisers are engaging with clients’ beneficiaries, and in perceptions of the value of advice amongst younger generations.
“It might seem like an obvious point, but you don’t want the first time you meet your client’s beneficiaries to be when your client has passed away. Depending on the age of the client, you’ll want to start building the relationship with their beneficiaries now. Help them understand the planning you are putting in place. Prepare them for the wealth that will come to them. The more engaged they are now, the more likely they will seek your advice when they inherit.
“Getting intergenerational planning right is key to protecting the value of your business. Estate planning is a natural opportunity to deliver great outcomes for clients and unlock the chance to work with the next generation.”
-Ends-
* Octopus via Opinium Research surveyed 1000 UK adults with investments partly or fully managed by an adviser and 200 UK financial advisers to uncover attitudes around intergenerational wealth. This survey was carried out during June 2024.