Inter-generational wealth transfer – Are US advisers ahead of the game?

In the US, the term ‘inter-generational wealth transfer’ has been commonly used in financial advice circles for many years.  Financial advisers and wealth manager across North America have adopted business strategies to ensure that they are well positioned to involve themselves in the redistribution of wealth when their client passes away.  With research suggesting that $30 trillion of personal assets are due to be transferred in the next 15 years, it’s unsurprising that advisers want to be able to capitalise on such significant wealth being inherited by the next generation of potential clients.

In the UK, the concept of inter-generational wealth transfer is very much in its infancy, with many advisers not having a strategy to ensure that assets remain under their management when they are inherited after the death of a client.  Should UK advisers be considering a similar approach to that successfully employed by their US counterparts?

As a basic principle, inter-generational wealth transfer is the process of assets being passed down to the next generation following death. Typically, individuals will have written a Will and bequeathed their estate to family members and loved ones, often their children. However, unless advisers already have a relationship with the beneficiaries, the process of transferring these assets as part of the estate administration process (also referred to as probate) could see advisers losing clients and funds under management on a regular basis. 

In the US, nearly 90% of beneficiaries say that they would be open to receiving financial advice from a trusted adviser when they inherit assets.  However, only one third currently retain their parents’ adviser, predominantly citing a lack of relationship with them as the main barrier. 

These figures are alarming but financial advisers in the US are becoming more aware of the risk of not engaging with their clients’ children. As a result, they are increasingly looking for ways to expand their service offering to include strategies which will provide them with an opportunity to build relationships with the beneficiaries of an estate. 

Tom Curran, Chief Executive at estate administration specialist Kings Court Trust said: “Although these statistics are taken from the US, the transfer of wealth in the UK is just as big a challenge for financial advisers. The Office for National Statistics estimates that £80 billion in personal wealth is inherited every year in the UK. Financial advisers know that their clients are getting older but few have a strategy in place for what to do when they pass away. Establishing a relationship with beneficiaries they haven’t met before could be difficult given the sensitivity of the timing, but this is where I believe we can help advisers bridge this gap by offering practical support and guidance on administering the estate.

By working in partnership us, financial advisers can offer our market leading, fixed price estate administration service directly to their clients’ family at a time of need. It helps open the conversation about ongoing advice for the beneficiaries in a natural and professional way, giving a better chance of retaining those assets under their management, while also positioning themselves to offer financial advice to the beneficiaries – their next generation of clients.”

Hundreds of advisers are already using our technology, knowledge and expertise to help families deal with the loss of a loved one and build their next generation of clients. To find out more about working in partnership with us, visit www.kctrust.co.uk/ifa.

Source
Investmentnews.com