Advisers Urged to Prepare for the Great Wealth Transfer: New Research Shows Lack of Strategy in Place

New research published today by Octopus Investments reveals a concerning trend among financial advisers when it comes to preparing for the Great Wealth Transfer, a massive transfer of wealth expected to take place between generations over the next 20-30 years.

The study found that a staggering 69% of advisers do not have a plan in place to tackle this significant event, leaving only a third (31%) with a strategy for the Great Wealth Transfer. With the inheritance economy estimated to be worth £5.5tn over 30 years, this lack of preparation represents a missed opportunity for advisers.

One of the main concerns highlighted in the research is the potential loss of assets under management in the event of a client’s death. Nearly half (46%) of advisers worry about losing these assets, with 50% of those who have had a client pass away estimating significant losses in assets under management.

Interestingly, advisers believe that beneficiaries would prefer to spend their inheritance (68%), but the study shows that 79% of investors would actually be likely to invest the money if they received an inheritance. This misconception underscores the value that advisers could provide to the next generation.

Furthermore, the research points to a lack of a multi-generational approach among advisers, with only 16% of clients having more than one generation of their family represented. This disconnect is further highlighted by the fact that only 37% of advisers have a clear proposition for those under 30, despite over half (54%) of investors believing that advisers should have different structures for different generations.

The study also reveals challenges in engaging younger generations, with advisers citing a lack of interest, perceived value, and knowledge about finance as barriers. Despite this, only 22% of advisers believe they should have different strategies for different generations.

Engaging with beneficiaries is another area where advisers are falling short, as less than half (48%) have engaged with the beneficiaries of their clients’ estates. This lack of engagement is concerning, considering that the majority of investors believe their beneficiaries would stay with their current adviser and recommend them to loved ones.

In light of these findings, Jess Franks, Head of Investment Products at Octopus Investments, emphasizes the importance of intergenerational planning and building relationships with clients’ beneficiaries early on. Franks highlights the need for advisers to prepare beneficiaries for the wealth that will come to them and stresses that getting intergenerational planning right is crucial for protecting the value of their business.

Overall, the research underscores the need for advisers to adapt their strategies to address the challenges and opportunities presented by the Great Wealth Transfer and engage effectively with clients across generations.