Wealth transfer advice has become a significant part of advisers' business over the past three years as the great wealth transfer gets underway, financial services commentators have said.
Heather Hopkins, managing director of NextWealth, said there were clear indications that more advisers were involving the spouse and family in conversations about intergenerational wealth, to help the surviving spouse make the right financial decisions.
She said: “Much focus has been placed on intergenerational wealth. But wealth often transfers to the surviving spouse.
"Women stand to inherit much of the UK’s wealth before it reaches the next generation. The majority of financial advisers are taking a proactive approach to engaging with the spouse of their clients, which is good news for all concerned.”
We need to use all sorts of opportunities, including technology, to give them advice.Gillian Hepburn, SchrodersMoreover, advisers are making greater use of hybrid working and technology used for remote meetings to bring advice to the whole household, not just to the breadwinning client.
According to Schroders' head of intermediary solutions Gillian Hepburn, many advisers have been taking the opportunity to talk to the children of clients over Zoom or Teams calls, asking them questions about student debt or their first payslip or what financial concerns they have.
Speaking to FTAdviser for the latest FTA Fireside Chat, Hepburn said: "We need to engage that next generation, and part of that is [us] understanding what the role of that wealth is in the family, and what it is for.
"We need to talk about things like pensions in a different language, and to engage differently."
She advocated not talking about things such as "tax relief" on pension saving, but to use terms such as "the government gives you a bonus for doing the right thing".
"We need to use all sorts of opportunities, including technology, to give them advice."
Hugo Bedford, chief executive at JM Finn, said he would "challenge" the notion that the next generation would automatically move managers once they have inherited wealth, given the importance of fostering good relationships with the next generation.
Bedford commented: "A good wealth manager should go to great lengths to get to know the next generation, as their needs are wrapped up in the life plans of their existing clients – this instils loyalty and, importantly, an understanding of the benefits of having someone to talk to, who knows you and who is fully accountable for your portfolio, when times are tough or different.
"It is this kind of relationship building that engenders trust and loyalty and which the wealth management community has traditionally offered, and which is in stark absence from a DIY service or platform."
Survey findings
Their comments came following research from M&G Wealth, carried out among 201 financial advisers earlier this year by NextWealth, which found that three in four financial advisers expect the demand for wealth transfer advice to increase over the next three years.
Some 59 per cent of advisers said they had already seen demand for wealth transfer advice rise over the past three years, while 84 per cent said they were already advising some clients on the wealth transfer.
According to the study, 88 per cent of advisers agreed it was beneficial to meet spouses to be able to offer more suited advice, especially when it comes to clients who are retired.
When it came to the most likely reasons for seeking wealth transfer advice, the study found:
- 67 per cent of advisers stated that their clients are focused on limiting inheritance tax liabilities
- 65 per cent said their clients have money to gift
- 59 per cent stated the importance of meeting the dependents of retired clients
- 30 per cent confirmed their business has specific packages and fees available for children of current clients.
Financial advisers working for larger firms with at least 10 client facing advisers, reported more of a demand for wealth transfer advice compared to those working in smaller firms, with 70 per cent compared to 59 per cent.
Some 38 per cent of larger firms said they have a deliberate business practice to prompt conversations with children or grandchildren of existing clients.
Justin Blower, director at M&G Wealth, said: “Our research offers valuable insight into wealth transfer patterns.
"We know that against the current economic background, the increasing threat of double-digit inflation, continued market volatility and ongoing geo-political tensions financial advice is more valuable than ever."
The latest M&G’s Family Wealth Unlocked report, carried out among more than 1,000 UK adults, revealed that 33 per cent of advised families used the same financial adviser as another generation of their family – or in-laws.
Of those who said they had an adviser, 57 per cent shared them with their parent(s) - including biological, step and adopted.
simoney.kyriakou@ft.com
