The Great Wealth Transfer could cost advisers vast amounts of assets, according to the latest Scottish Widows Investor Confidence Barometer.
More than nine in 10 (91%) advisers are concerned about losing assets when trillions of pounds are handed down to future generations and over half (57%) said that they only expect to retain services for a minority of their clients’ dependents upon their client’s death.
Scottish Widows said three quarters (74%) of advisers have a dedicated intergenerational planning strategy in place for the majority of their clients. However, while 75% of advisers acknowledge that it is important to foster a relationship with their client’s children, only 17% have established a relationship with the majority of them and just 12% have established a direct relationship with their clients’ grandchildren.
Ranila Ravi-Burslem, intermediary distribution director at Scottish Widows, said: “Intergenerational planning is such an important topic and it’s one that we’re really committed to supporting our advisers on. Our survey results suggest that there is scope to dial up engagement with dependents but crucially, emphasises the need to have earlier conversations with clients about estate planning.”
Scottish Widows said a large number of advisers are encountering barriers to intergenerational planning, with 70% citing the scepticism of younger generations towards the value of financial advice as the greatest barrier to dealing with clients’ dependents. Meanwhile, nearly two thirds (65%) described the difficulty they perceive in discussing a client’s death with them and their spouse or dependents (69%) as a leading barrier.
The results of the barometer showed that four in ten (41%) advisers only talk about estate planning at or after retirement, with 16% waiting until their clients are into their 70s or older. Nearly a quarter (24%) prefer to wait until the client initiates the conversation themselves while 21% discuss it only when the client becomes seriously ill.
Scottish Widows said advisers should also consider health and social care in later life, with 59% of advised and 56% of non-advised investors noting that the need to fund health and care costs in later life poses a barrier to passing on wealth to dependents.
Ravi-Burslem added: “With the ability to pass pension wealth down the generations, advisers must ensure their clients not only have their beneficiary nominations in place but that these are regularly reviewed as circumstances and priorities can change. Advisers should look to engage with named beneficiaries early so that things run smoothly when a client’s family most needs it to.”
