A new report ‘The Intergenerational Wealth Report’ by TIME Investments, which specialises in tax-efficient investment services, reveals that Millennials and Generation Z earning over £50,000 per annum are actively engaged in saving, long-term financial planning and inheritance planning. They are financially savvy but very much open to advice and are likely to seek help at a relatively young age, offering an important business opportunity for wealth managers and financial advisers.
To understand the attitudes and intentions of younger investors towards taking financial advice, TIME Investments commissioned unique research surveying 500 people, 250 Generation Z aged between 18 and 26, and 250 Millennials aged between 27 to 42, all with annual incomes of £50,000 and above. To understand how advisers are serving younger clients, research was also carried out with 125 professional financial and wealth advisers.
The study shows that 56% of respondents use a professional financial adviser or wealth manager and this is being driven by the need for help when it comes to choosing the best savings and investment vehicles, as well as retirement planning as they embark on their long-term savings journey.
The optimum age for seeking advice
When asked at what age they expected to engage with professional financial advice, there was an expectation across all respondents that this would happen sooner rather than later, with 28% of respondents starting to use an adviser aged between 26 and 30 years old, 20% between 31 and 35 years old and 13% between 36 and 40. A minority of just 4% said that they would be over 50 by the time they sought advice.
| Age Millennials and Generation Z surveyed expect to start using an adviser | |
| Now | 21% |
| 26 – 30 years | 28% |
| 31 – 35 years | 20% |
| 36 – 40 years | 13% |
| 41 – 45 years | 9% |
| 46 – 50 years | 4% |
| Over 50 years | 4% |
| Never | 1% |
Source: TIME Investments
Majority of advisers have a strategy in place to boost fee income from younger clients
Research with advisers shows that annual fee income from clients aged 40 and under remains a relatively low portion of overall revenues. The majority of advisers (85%) said that less than 50% of their income currently comes from clients aged below 40, highlighting their dependence on older generations.
However, the good news is that the findings show that advisers are tackling this head-on, with 69% saying their firm has a strategy for targeting Generation Z. Many are taking steps to make their services more relevant to younger audiences by embracing new technology and providing new services: 71% are investing in new technologies; 50% have developed a low-cost offer; 50% are implementing a social media marketing strategy; 45% are providing new services such as business advice; 45% are making use of new comms channels such as WhatsApp and Facetime, and 41% are improving their focus on ESG.
But is this enough? It’s not just about managing the funds these clients currently hold, as over 60% of those surveyed expect to inherit money from their parents and families. When considering this intergenerational wealth transfer, only just under half of those surveyed have an existing relationship with the financial adviser that currently looks after the assets that form the inheritance.
Of those without an existing relationship, 28% don’t expect to stay with the financial adviser who currently looks after the assets and 26% don’t know what they will do. This poses a huge risk for advisers and highlights the importance of building a good relationship with the next generation early on to protect assets under management.
Commenting on the study, Tom Mullard, Business Line Director (Tax) at TIME Investments said:
“Our research shows that younger age groups are very much open to financial advice and are likely to seek help before they are 40. This provides a very important business opportunity for advisers and wealth managers, particularly those that have a strategy in place to develop this client base through improved technology and new services.”
To download the report, visit https://content.time-investments.com/intergen-wealth-report
To find out more about Inheritance Tax planning, please contact TIME on 020 7391 4747 or questions@time-investments.com.
For further information on TIME Investments, please visit time-investments.com
Important information
The information contained in this press release does not constitute and should not be construed as constituting investment or tax advice by TIME Investments. Any views or opinions expressed are solely those of the author and do not necessarily represent those of TIME Investments. The levels and bases of, and reliefs from, taxation may change in the future. Any favourable tax treatment, such as Business Relief, is subject to government legislation and as such may change.
