Differences in attitude to money is impacting decisions around wealth transfer, new research from abrdn has revealed.
A third (32%) of baby boomers are less likely to pass their wealth to someone with a different attitude to money than them.
Across the entire population, the research found that more people prioritise making financial sacrifices for their future wellbeing (58%) than those that prefer to spend in the ‘here and now’ (31%).
Gen Z (those aged between 16 and 23) were found to be most likely to prioritise a short-term financial outlook (39%) than baby boomers (those aged between 55 and 73), suggesting a mismatch that could impact older generations’ wealth transfer decisions, abrdn said.
However, overall 90% of people plan to pass money on to family or friends in their lifetime or on death, with more people planning to do so during their lifetime (51%) than those planning to do so after death (39%). The research found the most common way people plan to pass their money on is by lifetime gifting to the generation below them such as children or nieces and nephews, followed by passing wealth to someone in their own generation such as a spouse after they die.
Jonny Black, strategic director, abrdn, said: “This is the era of the ‘great wealth transfer’ – trillions are set to be passed into new estates in the decades ahead. While younger generations’ attitudes to money may be different to those older than them, they’ll still need support in managing any inheritance they receive in line with their financial priorities, whatever they may be.
“Advisers have a critical role to play in helping clients transfer wealth in ways that accommodate their concerns. For example, trusts could be the perfect option for allowing clients to gift to the next generation, while still retaining a degree of control. Clients will value advisers’ support in understanding the full range of available options, and in navigating the complexities of setting them up.”
According to abrdn, 87% of advisers have a relationship with clients’ children, grandchildren or both and 29% have relationships with more than one family member for more than half of their client base.
Black added: “It’s encouraging to see that so many have already invested in building relationships with clients’ family members – including the younger generations. Firms should be continuing to review opportunities to start or develop these cross-generational connections. Done well, it will pay dividends for all involved.”
