Getting to grips with intergenerational wealth planning

Chartered financial planner Victoria Ross believes the increase of non-traditional family structures means that many people now have more complicated needs when passing on their wealth, but she insists that independent financial advisers are in the best position to help.

Ross, from Leeds-based Progeny, says: “In the years ahead, we’re likely to see more families having more complex requirements when it comes to passing on their wealth to the next generation as a result of factors like the increasing instance of blended and non-traditional family structures. This makes financial advice and lifetime financial planning more important than ever.

“The consideration of how wealth may be passed efficiently to the next generation is a key pillar of good financial advice, and our role as advisers is to create the space for constructive, multigenerational conversations within families. 

“As client books mature, building an intergenerational wealth transfer strategy is key to future-proofing any advisory business, but more importantly it is key to protecting clients’ assets and ensuring they are passed to the next generation as effectively as possible.”

Rise in the inheritance economy

The highly anticipated transfer of wealth from baby boomers to their children and grandchildren is another reason why it is essential for advisers to help families manage their wealth across generations.

In fact, estate administration specialist Kings Court Trust has estimated that the inheritance economy will be worth £5.5tn over 30 years.

Quilter pensions expert Ian Browne fears that IFAs who do not have a strategy to capitalise on this could end up harming their company.

He says: “Millennials, the generation most likely to be the children of baby boomers, are in prime position to inherit and have been called by some ‘the inheritance generation’.

“It’s quite simple – those advice businesses which wish to remain valued need to have an intergenerational wealth strategy. Without one, the death of your clients could harm your business. But this strategy should not simply be about long-term wealth management to protect the current value of clients, it’s also a growth strategy.”

However, Scott Gallacher, chartered financial planner and director at Leicester-based Rowley Turton, warns that this great transfer of wealth can also present challenges for advisers wanting to retain assets.

He says: “The transfer of wealth can present challenges for advisers in terms of retaining assets. Factors such as inheritance tax, beneficiaries’ own needs, and fragmentation can reduce the amount of wealth that ultimately stays with the adviser.

“Despite these challenges, advisers can still provide value to their clients through intergenerational wealth planning. By helping clients develop tax-efficient estate plans and educating their beneficiaries on financial planning, advisers can ensure that their clients’ wealth is managed effectively and stays within the family for generations to come.”