The Great Wealth Transfer

You may have read about the ‘The Great Wealth Transfer’.

If you are aged between 30 and 60, over the next 30 years, an estimated £5.5 trillion is due to be passed between generations in the UK. Source: Passing on the Pounds report, Kings Court Trust, 2017.

Key findings of research conducted by Octopus Investments illustrate:

• The majority of those whom are likely to benefit aged 30 to 60 do not have a financial adviser.
• Some financial advisers are too pessimistic about the chances of retaining the assets with you when your parents pass away. There’s a risk that your parents’ assets will be spent by you or invested directly by yourself.
• Far more retirees are open to involving you in their financial planning than are opposed to it. A good financial adviser can support your parents with this.
• Many advice firms do not hold your details on file. This can create problems when your parents pass away as solicitors and executors do not always think to involve your parents’ financial adviser.

Positively, 58% of financial advisers are seeking to grow the number of client beneficiaries they advise. But that still leaves a large number who aren’t. The most common barrier cited by financial advisers is that you are likely to have your own adviser.

However, Octopus research illustrates the opposite. Between 67% and 86% of people aged between 30 to 60 don’t have a financial adviser. While the figure is lower for those expecting to receive a larger legacy, it remains the case that most people expecting to inherit do not currently have an adviser, regardless of how much you are likely to receive.

The top five reasons why advisers don’t engage with you

• You have your own financial adviser
• It’s simply not something they have discussed with your parents
• You live too far away
• They don’t know who you are
• Your parents are opposed to the idea

Why you should challenge this

Octopus research shows there will be many instances where none of the above barriers apply. Even when they do, that doesn’t mean they are insurmountable.

For example, your parent’s adviser can ask your parents for your contact details. This will help any estate planning runs more smoothly.

Its just as easy to communicate remotely. Just because you live in a different part of the country is not a reason for your parents’ adviser not to contact you.

As for the top two reasons provided by financial advisers, Octopus research suggests that usually, these simply do not apply.

Most parents say they’re open to involving you

In our experience, most retirees are open to the idea of involving their children in their financial planning as opposed to it.

There is a perception amongst financial advisers that clients are reluctant to talk to their beneficiaries about their financial affairs. This will undoubtedly be true in some cases. However, is your parent’s financial adviser actively reaching out to you via your parents and seeking for you to be involved in the decision making?

Most parents will have spoken to you about how they have structured their wills, who their attorneys are etc. It makes sense you are aware who their solicitor, accountant, and financial adviser is too.

Most parents are open to the idea of talking to you about how much you will inherit. Most of the time, your parents will bring it up, but research suggests they would be happy to discuss it with you if you brought it up. They just need some gentle nudging.

How can financial advisers help?

We actively seek to speak to the children of our clients regarding their financial affairs and estate planning. We like to understand why your parents don’t want to have the conversation with you and get you involved.

It could be they are awaiting to reach a certain birthday; they have not got around to it; or just don’t think their estate is sufficiently large enough to get you involved.

Financial advisers can help by asking your parents whether there is any reason to hold off having those conversations. Your parents have good intentions, and some may just need some gentle nudging.

Taking practical steps

One simple thing you can do to help is to make sure you have a record or know where to look, to enable you to have the necessary documents to hand when circumstances change.

Beneficiaries details including yourself, attorneys, executors and solicitor details will be useful when your parents pass away, and probate begins. Solicitors wand executors won’t always think to involve your parent’s financial adviser, even though advisers can add a lot of value by explaining why particular investments were made and what your/beneficiary options are.

If you are aged between 30 and 60, likely to receive an inheritance from your parents or loved one in the future, it's highly likely you do not have a financial adviser, nor have you discussed your parents financial planning and their estate

3 questions you should consider asking yourself:

• Who is advising your parents/loved ones about their estate planning?
• What advice has been provided and why?
• What steps have you taken to help your parents pass on their estate in the most tax efficient way?

To discuss this in more detail, please call me on 01823 462400.