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Adviser firms risk neglecting under 45s and intergenerational wealth

2 August 2018

Adviser firms are at risk of neglecting the under 45s and with it the chance to win inherited pots, a new report by Sanlam has warned. 

Sanlam’s Generation Game report found that two thirds (66%) of advisers are not taking any steps to proactively engage with under-45s and a further quarter (23%) of advisers are concerned about their ability to attract younger generations in the future. Yet, the overwhelming majority (91%) said they didn’t believe under-45s were receiving adequate financial advice.

The findings came despite four in five (81%) advisers citing intergenerational transfer of wealth as the greatest opportunity for their sector and three in five (61%) noting an obvious increase in their clients asking about intergenerational transfer of wealth in the last three years.

At the same time, the report, which looked at the generational wealth transfer expected to take place over the next 30 years, found that nearly half (45%) of financial advisers didn’t engage with this younger segment of the market because they felt they are more likely to trust science or model based advice than traditional human advisers. Two fifths (40%) said robo advice was the single biggest threat to the future of their business. Yet, over three quarters (76%) of those surveyed who are expecting an inheritance said they would be looking to engage with a financial adviser once they receive their inheritance.

While the younger generations are much less likely to have accrued the level of wealth that advisers would be looking for at this stage, Sanlam said nearly 11 million people aged between 25-45 are expecting some sort of inheritance over the next 20 years, with 5.1 million expecting to receive at least £50,000.

John White, CEO of Sanlam’s UK wealth business, commented: “Our research highlights that financial advisers are acutely aware of the challenges intergenerational wealth transfer will create for themselves, their clients and their families over the next few years.

“While already dealing with the benefactors or current asset holders, advisers can use their established relationships to help families start the conversation about how much will be left through inheritance and how to plan for its efficient transfer.

“It’s a very British trait to avoid conversations about money and the sensitive subject of when parents or grandparents will pass away. However, the absence of these discussions is leaving clients and their families in limbo.”

White said that those expecting to receive an inheritance will do so without fully understanding the impact it could have on their futures.

“Not only will these conversations help those receiving an inheritance to plan ahead, parents can also take comfort from knowing their children are seeking financial support from a trusted adviser,” he added.

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