Adding value with an intergenerational wealth strategy

The intergenerational wealth strategy has two parts

Younger generations are facing financial pressures and difficulties. Generation X and Millennials are not accumulating wealth in the same way as their parents and grandparents (Baby Boomers) enjoyed. That’s why more and more millennials want to set up their own businesses.

This makes intergenerational wealth planning a key area where you can add value to your clients, and their families.

1. Retention strategy:

Assets remaining under management even though the legal ownership of those assets change.
The ownership could change either during a client’s lifetime (via gifting) or on death (via inheritance).

2. Growth strategy:

Assets coming under your management for the first time and new money being invested.
This represents a client acquisition opportunity. By creating new relationships with the family members of your clients, their existing assets could come under your management.
New money could also be invested following the death of your clients, where their illiquid wealth becomes liquid if those who inherit it, sell it. Examples could be property or expensive items like cars.

With both retention and growth in mind, we have looked at six key areas to help you add value to your clients, and help grow your business. We have used UK statistics, examples and solutions to further illustrate the strategies in detail. Keep a look out for the useful support material you can use with clients, and helpful tips:

Baby Boomers and the importance of family wealth transfer

Guidance on how you can explain to your clients the impact their intergenerational wealth planning can have on their families.

An easy first step

Start the intergenerational wealth transfer process with a simple step and demonstrate the value of your advice.

Get a gifting plan in place

Guidance on how to help the family understand the long term impact the gifting can have.

Other financial planning goals that gifting could support

Support material to help you show clients how long term investing can be used to help with education and getting on the housing ladder.

Cascading wealth so that it remains invested

A summary of the most common ways you might be managing the wealth of your client, how the legal ownership of this wealth can change and whether that wealth can remain invested.

Illiquid assets becoming liquid

How beneficiaries may need help managing proceeds from property and physical wealth.

        
                        “Baby Boomers, Generation X and Millennials lead very different lives, have different expectations and different resources. They will have different financial needs as a result. Financial services markets will need to adapt and innovate to meet them.”
                    
                                Christopher Woolard
                                                            Executive Director for Strategy & Competition
                                                            The FCA, 2019