In Focus: Profitable advice business  

How advisers are tackling wealth retention

How advisers are tackling wealth retention
Schroders' Gillian Hepburn talks of 'great wealth retention' for intergenerational advice. [Photo: Schroders]

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.”

Moreover, 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.