How generational investment aspirations have shifted

Generally speaking, they are naive about investing.Chan

"It’s arguably never been easier to make major investment mistakes very quickly – for example the relative ease of retail investing and access to crypto-currencies.

"We should strive as an industry, therefore, to ensure that opportunities for advice are made accessible and non-intimidating to those with little investing experience."

This then begs the question – is there a link between the great wealth transfer, investment opportunities for young people, and the need for advice and engagement?

Tim Morris believes so. “There is undoubtedly a link. Where we discuss inheritance with clients and involve their children, they certainly seem more engaged with how money is invested when ESG factors are discussed. And they may even raise this themselves on many occasions", he says.

Jobson-Wood agrees: "There’s clearly a potential risk of beneficiaries suddenly having access to a large amount of money, and not knowing what to do with it. For many there’s likely to be a gap in investment knowledge and experience.

"With an ever-growing and complex universe of investments, many young beneficiaries may feel like they don’t know how or where to start investing. "

He believes advisers have an opportunity to advise prospective beneficiaries about inheritance, how to prepare and help make the transfer of wealth smoother.

The consequences

Financial priorities are shifting with more investors showing an increased appetite for ESG investment. Advisers must be aware of the changing trends as young people begin to invest in stocks and shares.

This social awareness trend has continued to develop over the course of the pandemic and may have a lasting impact on intergenerational wealth.

But there are also other factors at play, which will shape the course of young people's financial preparedness, says Lily Morris. 

She adds: "Inheritors are likely to have goals such as debt repayment, travel, and building a pension.

"In addition, as those who received Child Trust Funds begin to come of age, we will be seeing the first time a significant number of young people from across the income spectrum have had a nest egg on their 18th birthday.

"It will be interesting to observe what they spend it on – whether investing it in an account or, in their education, or on enjoying life – as a precursor to wider intergenerational wealth transfers expected over the coming decades."

Leading up to the huge shift in wealth from one generation to the next, there is a need for advisers to look at new methods of making themselves available, or at least flagging their presence, via social media, as well as more communication among clients and family members.