A survey out of the UK has found 69% of advisers there don’t have a plan to work with the next generation of clients – who are in line to inherit the wealth of Baby Boomers.
Research carried out for Octopus Investments shows advisers aren’t prepared for what researchers term the Great Wealth Transfer. By 2055, £5.5 trillion ($11tn) will be handed down to younger generations in the UK.
Almost half of UK advisers (46%) are concerned about losing the management of those assets. In fact, half of the 200 advisers surveyed estimate they have already lost between £300,000 and £5m worth of assets under management due to clients dying, and the beneficiaries not turning to them for advice.
According to advisers who responded to the survey, the main reason for not retaining the assets of a deceased client’s beneficiaries is they (68%) assume beneficiaries want to spend their inheritance. However, 79% of the 1,000 investors surveyed would likely invest the money.
…just 16% of advisers are working with more than one generation of their clients’ family…
Despite three quarters (71%) of advisers thinking they have a sufficient approach to meeting client needs across a range of life stages, just 16% are working with more than one generation of their clients’ family. Only 37% of advisers have a clear proposition for those under aged 30.
Interestingly, 54% of investors told researchers advisers should have different fees, sales, or marketing structures for different generations.
When asked about the difficulties they experienced in providing advice to 18 to 34-year-olds, almost half (48%) of advisers say the cohort is less engaged or interested in their finances.
A similar percentage (46%) think this generation doesn’t see the value financial advisers provide, and 38% believe this age group lacks knowledge about finance.
Of the consumers surveyed with funds under management, less than half (48%) said their financial adviser had engaged with the beneficiaries of their estate.
While 45% of advisers say clients do not see the value in bringing their beneficiaries into discussions around their finances, 58% of investors think their beneficiaries would stay with their adviser, and 79% would recommend their adviser to loved ones.
…We are on the cusp of a seismic shift as the Great Wealth Transfer occurs…
“It certainly seems as though advisers have a role in facilitating these conversations,” says Jessica Franks, October Group’s Head of Investment Products.
“We are on the cusp of a seismic shift as the Great Wealth Transfer occurs in the next couple of decades.
“There is also a clear generational divide, both in how advisers are engaging with clients’ beneficiaries, and in perceptions of the value of advice among younger generations.
“It might seem like an obvious point, but you don’t want the first time you meet your client’s beneficiaries to be when your client has passed away.”
Franks says that depending on the age of the client, advisers should start building the relationship with their client’s beneficiaries now.
“Help them understand the planning you are putting in place,” she says. “Prepare them for the wealth that will come to them. The more engaged they are now, the more likely they will seek your advice when they inherit.
“Estate planning is a natural opportunity to deliver great outcomes for clients and unlock the chance to work with the next generation.”
Octopus, via Opinium Research, surveyed 1,000 UK adults with investments partly or fully managed by an adviser, and 200 UK financial advisers during June 2024.
