Rich families have learned over the years how to pass down their assets through the generations (perhaps it is taught when they learn which knife to use to butter their bread, or how to tie a cravat). The rest of us, in the middle classes, are very poor at it indeed.
A recent report by asset managers Sanlam found there are 5.1 million people aged between 25 and 45 who are likely to inherit about £233,000 each over the next three decades. That’s £1.2trn. So much for moaning millennials. More like the lucky generation.
What a perfect example of income redistribution. Though I am sure any Corbynistas reading this would disagree.
Only, of course, they will not actually get all this money. It will be mostly eaten up by taxes.
Why has it become so politically toxic to want to, say, give away money to your children to help them do better, when giving away money to put your parents in a good care home is not?Because what Sanlam does not get into is how and when millennials are going to get this money. And inheritance is changing – it is now not coming until much later in life.
Many will get an inheritance only when they hit their 60s – that is too late to buy a first home and too late to help put the next generation of children through school and university.
Part of the problem is that though we’re living longer, we’re not necessarily living better. Families are worried that they will have decades of care fees to pay for.
Ironically, while much of the intergenerational angst about wealth comes from resentment of those with a final salary pension, children of the baby boomers may well be thankful for their parents' luck. In many cases it should be enough to cover a substantial part of care fees for their father and their mother – that is like someone else covering the bill for you.
It is perfectly understandable to take precautions for your later years. But with the huge increase in asset prices this generation have enjoyed over the past three decades – particularly on property – it is also time for the middle classes to start behaving a bit more like the rich.
They need to get into the habit of passing down wealth earlier. It is not just sensible: it is tax efficient. It needs to become part of the national debate about personal finance.
Why has it become so politically toxic to want to, say, give away money to your children to help them do better, when giving away money to put your parents in a good care home is not? It is the same intergenerational redistribution of income.
Only when money starts to dribble down through families will the intergenerational divide that has become so toxic finally end.
Why we need a pension passport
Caution is a sensible thing in retirement, but it now looks as though many have been over cautious.
As the FCA reported last week, too many who have accessed pension freedoms are dumping their pensions in cash, when if they took out a simple drawdown product they could boost their incomes by a third.
This is retirement anxiety, but it is also pension confusion. Too many simply do not understand drawdown, and they have had their fingers burned by investments before.
Financial advice needs to become a routine part of the conversation for anyone unlocking their pension.
The barrier, as it always has been, is the insurance companies. They get to savers before any independent person can, only to bombard them with their own products.
It is why I have long campaigned for the pension passport. Only a single, simple wake-up pack can help point savers in the right direction for the best way to get value from their retirement fund.
There is no such thing as free banking
Why the idea of free banking still has this mythical status is beyond me. That beast should have been laid to rest many years ago.
But when Andrew Bailey, chief executive of the FCA, declared it so last week, it made front-page news.
Salesmen at banks are to blame – convincing customers they get something for nothing. I hate to say it, but the same thing happened with commission and IFAs in the 1990s and the early part of this century.
Clients were led to believe they got something for nothing, so it was a revelation when they realised a little bit of their savings were being paid to advisers they had not spoken to in years.
Worse still, it undermined the value of advice. Making it sound like it was free made it a worthless commodity, when in reality it could be the most valuable thing you ever pay for.
James Coney is finance editor of the Daily Mail
