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Advisers on their role in intergenerational wealth transfers

This article is part of
Guide to retaining intergenerational wealth

Advisers on their role in intergenerational wealth transfers
Credit: Ylanite Koppens from Pexels

Planning for intergenerational wealth transfers requires both advisers and clients to think ahead.

By the time a client becomes elderly or passes on, it can be too late for an adviser to engage with those who will inherit their wealth as they are more likely to have found their own adviser, says Martin Brown, managing partner at Continuum.

“Our advisers regularly check in with their clients for family updates, and we have developed an interactive online family tree to help with these discussions. Any big change for a spouse or children can also mean that it would be appropriate to suggest making changes to the client’s financial plan. It is important not to get tunnel vision.”

If an existing relationship is not already in place, annual meetings are an opportune moment to forge relationships with a client’s close family, says Gemma Harle, managing director at Quilter Financial Planning.

“It is dangerous to assume that clients will automatically involve their advisers in intergenerational wealth transfers. So, it’s important to use annual reviews to create trust and be the go-to professional regarding this most intimate area of financial planning.

“We have encouraged advisers in our network to help identify the risks that the intergenerational wealth transfer might pose by providing a self-diagnostic exercise that helps reveal where more work might need to be done.”

This self-diagnostic exercise involves advisers analysing their top 10 clients by the value of wealth under management and annual fee income, and whether the adviser has a relationship with the client’s partner, parents, children and grandchildren.

A multi-adviser approach

But James Morrell, managing director at Rothschild & Co’s UK wealth management business, speaks of a different approach.

He says the business does not “artificially analyse” or segment clients’ data, or make assumptions based on a client’s age, gender or other demographics.

“As a business run by the seventh generation of the Rothschild family, taking a long-term perspective when we think about how we work with clients and invest on their behalf is very much in our DNA.

“Of course, it’s also much more challenging to recruit a new client than to retain an existing one, another reason why we focus on exceptional client service and ensuring that our clients have no reason to look elsewhere.”

Rather than focusing on a strategy for wealth retention, Morrell says the wealth manager plans for intergenerational wealth transfers by assembling client teams that work for the ‘wealth creator’ and succeeding generations.

“Our aim is that our teams reflect the diversity of our clients. No two clients are the same and, while you don’t necessarily have to put someone in front of the client who looks like them, it’s important to have a pool of people to draw from that can relate to clients on various levels – be that ethnic background, age, gender, interests or life experiences.