Advisers are at risk of missing out because they are failing to service younger people who will shortly inherit a generational windfall, according to a report by Sanlam.
Sanlam’s Generation Game report, out today (17 July), found two thirds of IFAs were not taking any steps to engage with clients aged 45 or younger and a further quarter were concerned about their ability to attract younger generations in the future.
This is despite the fact these people could collectively receive at least £1.2trn in inheritance over the next 30 years as their baby boomer parents die off, the report stated.
Despite this, the majority of the 200 advisers surveyed in April said they were aware of the implications of wealth transfer – with some four in five - 81 per cent - saying they saw intergenerational transfer of wealth as the greatest opportunity for their sector.
Three in five - 61 per cent - said they had witnessed a notable increase in their clients asking about intergenerational transfer of wealth in the last three years.
John White, chief executive of Sanlam UK’s wealth business, said: "Our research highlights that financial advisers are acutely aware of the challenges intergenerational wealth transfer will create for themselves, their clients and their families over the next few years.
"While already dealing with the benefactors or current asset holders, advisers can use their established relationships to help families start the conversation about how much will be left through inheritance and how to plan for its efficient transfer.
"It’s a very British trait to avoid conversations about money and the sensitive subject of when parents or grandparents will pass away. However, the absence of these discussions is leaving clients and their families in limbo."
Almost half - 45 per cent - of the financial advisers surveyed for the report said they didn’t engage with the younger generation because they believed they were more likely to trust science or model based advice than traditional human advisers.
About 40 per cent of those surveyed specifically cited robo-advice as the single biggest threat to the future prosperity of their business.
The regulator has, meanwhile, also shifted its focus on intergenerational issues and is due to release a paper on the subject later this year.
It will cover a host of issues including identifying any barriers which are preventing the market from innovating and meeting changing consumer demand.
In a speech at the Pensions Policy Institute yesterday (16 July), executive director for strategy and competition, Christopher Woolard, said there was a sense of frugality among some pensioners, which meant far from overspending they were actually not spending enough.
But an increasing life expectancy is having a knock-on effect on intergenerational wealth, with the next generation inheriting money later in life than was the case for previous generations, he said.
Martin Bamford, a chartered financial planner at Informed Choice, said: "Advisers tend to focus on those clients who hold the most wealth today, the baby boomers. With a limited supply of adviser, it’s hard to look beyond the post-war generation and spend time developing services which would appeal to those accumulating wealth, who are also the future beneficiaries of assets.