In Focus: Intergenerational Wealth  

Advisers concerned about family disputes in inter-gen planning

Advisers concerned about family disputes in inter-gen planning

Four in ten advisers are concerned about starting a family dispute when approaching the subject of intergenerational planning, a report has found. 

The report by AKG, titled Advancing Intergenerational Planning Opportunities, found the majority of advisers expect demand for intergenerational planning to grow in the coming years but not all feel comfortable approaching the subject.

Some 44 per cent of the 101 advisers polled this summer said they were concerned about potential family disputes when talking to their clients about intergenerational wealth, and 38 per cent were worried about possible vulnerable client issues.

About a quarter (24 per cent) admitted a lack of expertise in legal issues.

Charles Stanley head of sales Sean Osborne said now was a good time for advisers to get skilled in this area as more families were open to addressing it.

He said: “The Covid-19 pandemic has started to change [people's attitudes] – acting as a catalyst for these conversations as people look at the uncertainties the future may hold. 

“Now feels an ideal opportunity to engage with families around some of the key planning opportunities to secure their own and their family’s future.”

AKG’s director of communications, Matt Ward, said for any adviser looking to tackle this space the development of training and compliance modules within firms were vital. 

“Similarly, aligned processes which continue to maintain best practice and ensure the recording of all interactions and issues will be needed to provide solid audit trails. 

“There is also a requirement for development of empathic relationship and soft questioning skills, and a need to broaden fact finding to bring family hierarchy, goals and issues into play,” he said. 

The majority of advisers polled (59 per cent) said a greater awareness of the impact of inheritance tax was driving growth in demand for this type of financial planning.

Changes in pension laws to make funds more attractive for passing on wealth and the Covid pandemic were also cited as drivers. 

Sean Christian, a managing director in Canada Life’s wealth management division, agreed that investing in softer skills can help advisers.

He said: “Intergenerational wealth planning presents a huge opportunity, but it isn’t an open goal. 

“Wealth accumulated in property and other assets will reach trillions of pounds in the coming decades and advisers will need to have strategies to manage this wealth through the generations.

“Investing in softer skills, working closely with providers who offer holistic solutions, and keeping up to speed with the technical aspects of trusts and estate planning will keep advisers one step ahead.”

The average inheritance tax bill climbed to more than £200,000 in 2018-19, a 6 per cent rise compared with the year before, according to HM Revenue & Customs data.

Sean McCann, chartered financial planner at NFU Mutual, said: “With the tax-free allowances frozen for the next five years, rising asset prices and a heated housing market, a growing number of families will be impacted.