Multigenerational planning is changing, and so is the advising world

Multigenerational planning is evolving, and advisers may need to rethink their approach. David Batchelor, founding partner of Wills & Trusts Partnership Ltd, reflects on more than three decades in the profession and explains why focusing solely on inheritance tax (IHT) mitigation risks missing the bigger picture when it comes to protecting family wealth and legacy.

When passing an estate to the next generation, we are fixated on IHT mitigation, when this is less than half of what we should be doing.

Over the past 35 years, I have focused my practice on what we now call multi-generational or intergenerational planning. Put simply, passing what it has taken a lifetime for clients to build on to the next generation without the tax man or anyone else taking a share.

So, what’s the problem?

For so many years, we, like most financial advisers, have focused on IHT mitigation. This is something that has always helped us build a strong and vibrant business. Of course, the inclusion of pensions in the taxable estate from April 2027 has increased the issues clients face and, thus, the opportunity for us to help them.

In my experience, using a collection of trusts, family investment companies, and debt, you can remove almost all of the IHT that an estate will generate. As long as a client is willing to plan, pay reasonable fees (no end of times have I told a client ‘you can’t get rid of a £2 million tax bill with just a £400 Will!’) and listen, removing IHT can be simple for 95% of people.

However, I believe that, as advisers, we are too easily wrapped up in the ‘exam approach’. When I was a question setter for the Chartered Insurance Institute (CII), all multigenerational questions always focused on IHT, as if that was the only issue. That was simply because our approach as advisers has been focused on what financial services ‘products’ we can sell.

True multi-generational planning should have nothing to do with product and everything to do with the objectives of the client. If all we do is avoid IHT only for the children to end up arguing amongst themselves about who should get what, or for the money to be wasted by grandchildren or for a legacy to be lost due to a divorce, what is the point?

And this brings us to another point. How will advisers survive in a world of ChatGPT advice? You only have to build an avatar with HeyGen to realise that it won’t be long before someone will build an avatar that can give advice online and potentially take ‘real’ advisers out of the equation eventually. They could do this 24 hours a day, 7 days a week, at a fraction of the 1% most advisers charge on investments. To younger generations, who prefer to do everything on their phone, when they want to do it, not when you are free to meet, the appeal of not talking to a real person is huge.

Don’t be fooled, this is coming, and it is coming faster than you think.

So, what should we do? How do we solve the coming avatar wave? How do we help families with true multigenerational planning?

The answer is to focus on the generation with the wealth, build an unbreakable relationship, and link that securely to their children in a way that makes it very difficult for an AI Avatar or AI Agent to do what you can do.   

How I found the solution

Two years ago, I dealt with the estate of a very wealthy client who died, leaving his large estate to his siblings and grandchildren, as his son had died previously. Three years prior, his wife had died, and I attended the funeral. At the funeral, I caught a conversation between his granddaughter and a friend. In that conversation, she said ‘Well, I don’t need to worry about money because I am going to inherit all of granddad’s money’. In that moment, I realised that I was only doing part of the job. The client had engaged me to reduce IHT, which I did very successfully. However, what he really wanted was for his estate to pass down to his grandchildren in such a way as not to destroy their ambition, to not create a feeling of entitlement, and for his legacy to support their life, not ruin it.

From this, I realised that true multigenerational planning must include all of the family in the planning, and here is the important thing….in the meetings, held in person!

A true ‘Family Client’

When I take on a client for multigenerational planning, I make it clear that IHT is only the starting point, and it is more about making sure their legacies do good and last for generations to come.

The process starts with what we call a Family Summit. This includes the parents (usually in their 60’s or 70’s) and their children (usually in their 30’s and 40’s). The summit is a 3–4-hour meeting held in our boardroom, with beautiful food served in a fabulous environment. No one is permitted to attend by video; everyone must attend in person. Great decisions are made in a collaborative environment.

After a short introduction, I have everyone take a quick financial and legal test. Think of this more like a pub quiz, with papers being passed around for marking. This breaks the ice, creates a fun atmosphere and gives me an insight into everyone’s knowledge level.

Then the discussion begins. I start with two killer questions to the children, where the parents are not allowed to speak:

‘How much do you expect to inherit?’

I get a range of answers, none of which come anywhere near the right figure. Then I ask

‘How much do you need to inherit to make work an option?’

I then get a different set of answers. Most people give much lower answers than they will inherit, and each gives a different number. I then ask, ‘so if you received that amount, would you be happy, or do you think you need to have the same amount as your brother and sister’, and then I let the conversation begin.

This conversation brings out all of the hidden issues within the family. It allows the parent to understand the family dynamics and what might happen when they die.

The rest of the meeting is a mix of financial and legal education and setting initial family objectives. It is very different when the children are involved in discussing and agreeing on objectives.

These meetings involve deep and meaningful conversations with many people talking at the same time, and the need for me to give guidance and direction. Something that ChatGPT and an avatar are nowhere near doing, especially as it can’t be physically in the room.

From here, I have individual meetings with the children and parents, culminating in the development of a Family Legacy Plan, which is interwoven with the children’s situations, bringing them on board as clients. The next stage is to involve the grandchildren.

This approach is radically different to what most advisers are doing and produces amazing results as well as building strong ties with the whole family. Not only this, but these Family Clients are paying large retaining fees, which removes our reliance on fund-based fees and allows us to link the fee to the value that the client is receiving.

After three decades in the profession, I believe the advisers who thrive will be those who focus on families, not just finances.

About David Batchelor

David is the Founding Partner of Wills & Trusts Partnership Ltd, which began as an adviser firm in 1992, but now brings together an independent financial adviser and an accounting firm.

Previously President of the Life Insurance Association, David co-founded the Personal Finance Society, of which he was a director for several years. The Society is now a pillar of the financial services profession.

David is a highly regarded public speaker who is regularly invited to host or speak at conferences worldwide.