Advisers have been urged to consider the changing demands from their clientele or risk becoming “out of touch”.
A report on intergenerational advice, published on Tuesday (September 24), showed 300,000 people were set to inherit £327bn in the UK over the next ten years and more than half of the inheritors were not planning to use their donor’s adviser.
According to the report from Brookes Macdonald — entitled ‘Seizing the opportunities presented by wealth transfer’ — this transfer of wealth provided an opportunity to advice firms willing to strengthen their existing client relationships but threatened the “unprepared firms”.
The research showed almost half of advisers did not have any relationship with their clients’ children despite the fact they were the most likely inheritors of their current clients’ wealth, while only 10 per cent had any contact with extended family members.
On top of this although 89 per cent of inheritors used an adviser, only 47 per cent were likely to use the same adviser as their donor while 53 per cent were not set to use the same IFA.
Darren Cooke, chartered financial planner at Red Circle Financial Planning, said good advisers were already working with families on intergenerational wealth planning to help avoid inheritance tax issues and engage with the next generation who will inherit liquid cash and property wealth from the baby boomer generation.
He said: “Many advisers are focused on assets under management and if a client doesn't have money, they won't engage with them.
“Younger clients often don't yet have the funds so advisers don't talk to them. Then, when the money does come via inheritance, they don't want to speak to the adviser that didn't want to know them because they weren't rich enough.”
The research also found there were large discrepancies between what advisers believed inheritors valued from their services and what inheritors actually looked for in an advice service.
For example 89 per cent of advisers thought rapport with an adviser was very important to clients while only 59 per cent of inheritors thought the same.
In general the report found advisers believed reputation and the quality of relationships were the driving factors in the appointment process while inheritors cared more about investment experience and performance than advisers realised.
For instance, 59 per cent of inheritors thought investment performance was a key marker in the decision over which IFA to hire while only 36 per cent of advisers had thought so.
The report also stated younger clients would have greater demand for online access, often via smartphones, and that an absence of this capability could make IFAs or firms look “out of date”.
Sarah Drakard, IFA at Cruze Financial Solutions, said: “A lot of my clients are the inheritors of such clients because they don’t want to deal with the ancient dinosaur their parents trusted and often feel like the adviser doesn’t respect them in the same way they do their parents.