The ‘Kids’ Are Ready to Inherit £200,000 - £500,000k+, are you Ready to Help?

In a rapidly evolving landscape of intergenerational wealth transfer, Cormac Dunne, Head of Growth at Estgro, delves into the dynamics shaping the future of financial planning in his exploration of the findings from a recent survey conducted by Estgro’s sister company, Arken Legal.

 

Arken Legal, recently ran a survey to its client base of professional estate planners. The results found that 65% of people plan to leave between £200,000-£500,000+ to their children or beneficiaries.

 

This supports recent media stories about The Great Wealth Transfer. A phenomenon that is set to get underway over the next 10 years and will see TRILLIONS pass from the Baby Boomer generation to their Gen X and Millennial children.  

 

When asked, “Do you feel your client’s beneficiaries are including their inheritance in their lifetime financial planning and are therefore starting to rely on it?” A whopping 48% of respondents felt that they were. Implying their parents’ money is becoming increasingly important to their lifetime goals and ambitions. Which places pressure on family dynamics and the professionals who support them in navigating family wealth. 

 

This is especially true when we consider the survey finding that 52% of those surveyed felt their clients were concerned about how their children or beneficiaries will manage the money they inherit. Suggesting they may not entirely trust their Millennial or Generation X children to properly utilise or protect the windfalls they plan to leave them. Placing even more pressure on professional advisors to help protect family legacies.  

 

Creating a relationship with those set to inherit not only helps keep high-net-worth families as clients over the longer term, but it also helps to protect family wealth and preserve it for as many generations as possible. 

 

Who will they turn to?

Research shows that 90% of inheritors do not intend to use their parents’ financial adviser after they receive an inheritance. The market could therefore be set for a big shake-up, with recent heirs and heiresses moving their money to different advisors. 

The estate planners surveyed were found to be conscious of this movement too, with only 23% reporting that they had a direct relationship with their client’s beneficiaries and over 40% reporting that they hoped to have one. 

 

Whether Millennials and Generation Xers stay with the same providers could come down to a myriad of factors, but we could consider two key factors as:  

 

  1. Whether they can build a trusted relationship with beneficiaries.
  2. Whether they can service these clients conveniently.
  3. Arken Legal also asked , “In your opinion, do you think that the next generation of clients (Generation X and Millennial’s) will expect digital services, processes and apps as part of your service delivery?”

 

52% responded that they did and that they were already preparing for it. The question is, is the financial advisor market following suit? 

 

 What do they want?

When it comes to service delivery, Millennials and Generation X want convenience.

This is something that is growing in awareness and respondents are currently investing in:

 

  1. Digitising more of their process so their turnaround times are quicker. 
  2. Becoming more accessible for new clients via digital channels – e.g. social media and their website. 
  3. Introducing more communication channels for their clients, so they’re more convenient to contact.
  4. Respondents also mentioned that they would like a client portal where clients can manage actions and review the status of their estate plans.

 

These organisations are actively investing in digital transformation to compete for the custom of transient beneficiaries. As inheritance, wealth management and estate planning are so closely related, it could be argued that Financial Advisors need to start considering this type of digital transformation too. Especially when it comes to inheritance planning.  

 

In summary 

 

The upcoming generation is counting on receiving a substantial inheritance. More of them are pinning their lifetime financial plans and aspirations on this inheritance, yet their parents fear they might mishandle these windfalls. 

 

The phenomenon of The Great Wealth Transfer underscores the growing concern, affecting numerous families. This presents a key opportunity for Financial Advisors, particularly if these heirs venture into the market, but it also brings increased pressure. Protecting the assets managed by advisors should be of high importance. Proactively identifying prospective beneficiaries and initiating early engagement is crucial to establish themselves as trusted family advisors. 

 

According to Arken Legal’s survey, professional estate planners are bracing for market shifts. They’re not just considering how to engage more broadly with families and future heirs, but also how to align with the markedly different purchasing behaviours of Millennials. 

 

Are you ready?  

 

Book a call today with a member of our team to discover how Estgro can help.