Most advisers worried about losing business in wealth transfers

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Most advisers worried about losing business in wealth transfers
Pexels/Liza Summer
BySonia Rach

More than half (59 per cent) of advisers are concerned they could lose business as wealth transfers between generations, according to the Schroders UK Financial Adviser Survey.

The survey, which was launched yesterday, revealed this was up from 54 per cent in May 2022.

It was completed by 439 advisers and conducted online between October 18 and November 8 2022. 

Over the next 30 years, some £5.5tn is expected to be passed between the generations as baby boomers start dying off - a phenomenon which has been labelled as the greatest wealth transfer in UK history. 

Gillian Hepburn, intermediary solutions director at Schroders, said: "We've been working with advisers who clearly think it's a huge opportunity for them, but it has also been quite frightening. 

“Wealth transfer is not necessarily about sitting with your wealthier clients and IHT planning, it's about that engagement with the next generation who will take that money and do something else with it.”

The research found that for 46 per cent of advisers, the average age profile of their clients has increased over the past five years while just 11 per cent reporting a decrease.

However the age profile of clients remains largely unchanged from last year’s survey, with 68 per cent of advisers surveyed stating they have clients with an average age of 51 to 64. 

“Advisers are still predominantly dealing with older, wealthier clients,” Hepburn said. “That's their sweet spot. 

“So all those votes about targeting the next generation - we're not really seeing that coming through despite the fact that 26 per cent of advisers say they've a proposition for targeting and transfer both to the next generation. 

“It kind of doesn't feel like it when you look at the timeline.”

The survey found that despite an increased industry focus on the risks and opportunities posed by intergenerational wealth transfer, the percentage of advisers with a differentiated strategy for younger investors or for retaining, attracting and advising women had reduced.

 This challenge, particularly around attracting younger generations, is brought sharply into focus with the declining percentage of advisers who will accept new clients with less than £50,000.

The survey revealed only 32 per cent of advisers would take on clients with less than £50,000, down from 52 per cent in 2019. 

Meanwhile, the percentage of advisers who will only accept new clients with more than £200,000 has risen to 17 per cent. 

Hepburn added: “Directly engaging with clients at this time will perhaps also be helpful when developing strategies for advising the next generation, as this year’s survey has found the number of advisers who are concerned about losing assets as wealth transfers between generations has increased.