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Why inherited wealth is a ‘lucrative’ business opportunity

This article is part of
Guide to retaining intergenerational wealth

Why inherited wealth is a ‘lucrative’ business opportunity
Credit: Maria Lindsey Content Creator from Pexels

A common talking point in the advice community is the concept of intergenerational wealth transfers.

The Resolution Foundation estimates that the value of inheritances is set to double over the next 20 years, amid rising levels of wealth, an ageing population and the increasing difficulty for younger adults to accumulate significant wealth.

“Advisers may have worked their whole career to build up their client bank and their client’s wealth. But if they fail to put into place strategies to ensure that inheritors see their value, there is a very real risk that this wealth will go elsewhere,” says Gemma Harle, managing director of Quilter Financial Planning.

“While many advisers do have a relationship with a client’s spouse, it can be less common for them to also know their children. Unless an adviser has made an effort with an inheritor to illustrate the value of advice, there is a strong possibility that an inheritor will look elsewhere for their advice.”

Neil Clarke, director and independent financial planner at Lucas Fettes Financial Planning, agrees that without a strategy to retain inherited wealth, businesses risk losing assets under management.

“[This] makes it more important than ever to encourage and facilitate financial conversations between clients, spouses and their beneficiaries. This is exacerbated by the growth of direct-to-consumer platforms, as well as the natural scepticism of younger generations surrounding the value of professional financial advice, given the level of general information now available online.

“Demonstrating value early on, and encouraging ongoing conversations, is the key to retaining future clients and the associated AUM.”

At Continuum, clients are encouraged to involve their family in the estate planning process as early and regularly as possible, says Simon Reeve, head of operations at Continuum.

“By doing this, not only can we make sure the estate planning is tailored to the needs of the extended family, but it also offers our advisers the opportunity to build a strong and lasting relationship with the whole family.

“This often leads to our advisers having multiple generations of one family as clients. Through this relationship, and the recommendations our clients give us, our advisers are able to educate the wider family as to the benefits of financial planning.

“At the end of the day the inheritor may well choose to take advice elsewhere, or go it alone, but at least we know we have shown them what a good financial planner can offer them.”

Efficient wealth transfers: a ‘pillar’ of good advice

At Progeny, the business finds that in practice the majority of a client’s financial decisions are motivated by family. Therefore, intergenerational wealth planning should be a significant part of a business's approach and proposition, says Ian Browne, chief of advisory services at Progeny.

Considering how wealth may be passed efficiently to the next generation is also a key pillar of good financial advice, he says.