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Familial support the key to avoiding inheritance exodus

Advisers must look beyond numbers and deliver valuable emotional and practical support to the wider family of clients to prevent a great inheritance exodus, according to a new white paper by wealth manager Charles Stanley.

by
Charles Stanley

03.12.2019

Over the next 30 years, it is estimated that around £5.5 trillion is due to be passed between generations in the UK1. Helping clients navigate this period of transition and developing the right structures for their wishes to be implemented will be a real challenge. But advisers should also be aware that this transfer of wealth risks triggering an inheritance exodus for their own business, as recipients are most likely to be aged over 55 and may already have a financial adviser.

Charles Stanley’s ‘Book of Stories’ shares expertise and key experiences to give practical assistance to financial advisers when it comes to dealing with clients and their beneficiaries.  Speaking at the launch, John Porteous, Group Head of Distribution at Charles Stanley, noted that inheritance is an emotionally loaded act, where feelings toward inherited wealth is complex and not always rational or objective.  Trusted advisers can add value by connecting families around the ‘uncomfortable truths’.

With nearly one in five (18%) advisers having never met with clients’ children2, a poll of advisers at the ‘Book of Stories’ event revealed that getting to know a clients’ family or dependents is the biggest challenge they face when supporting clients through intergenerational wealth transfer.  If this trend continues, the ‘great wealth transfer’ will become a ‘great inheritance exodus’ for advisers across the UK.

Despite a volatile political and economic climate, as well as increasing cost pressures for those in later life, Charles Stanley’s research4 found that over half (53%) of UK adults with children over the age of 18 have told them that they will receive an inheritance comprising all their wealth. One in ten (10%) are likely to pass on an estate worth £500,001-£1 million. Hyper-personalised financial advice will remain important for the next generation. 

John Porteous, Group Head of Distribution, Charles Stanley said: “Quite rightfully, we see a lot of attention being paid to the ‘great wealth transfer’ that is currently looming on the horizon. But the age at which people are most likely to inherit is too often overlooked. Those aged 55-64 are most likely to receive a big windfall from family, and the challenge advisers face is retaining the family’s business post transfer.

“Developing a contact document for extended family members is a great way to demonstrate both value and understanding.  By setting out a detailed process explaining what measures have been put in place, decisions that have been made, and where key documents can be found can ensure that the family members left behind feel fully involved, know their loved one has been looked after properly, and that they feel fully supported by their adviser. As the financial landscape shifts and new issues arise, advisers must react and adapt to remain relevant.”

 

1 Passing on the Pounds report, Kings Court Trust, 2017 - https://www.kctrust.co.uk/partners/inheritance-economy 
2 Money Marketing ‘Are advisers at risk of losing wealth across generations?’ https://www.moneymarketing.co.uk/analysis/wealth-transfers-intergeneration-financial-advice/
3 Research carried out among attendees at Charles Stanley Adviser Conference 21.11.19. 47 advisers took part in the poll
4 Research carried out by Charles Stanley between 31.01.2019 - 06.02.2019. Sample was 1,010 UK-based parents with children over 18

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