Are you ready for the new beneficiaries of wealth?

For professional advisers and paraplanners only. Not to be relied upon by retail clients.

About 30 years ago, the sudden and unexpected death of a client sprung Alan Marks – at the time a financial adviser – into action.

It was an important client and Alan worked overtime to get everything in order for the client’s loved ones, including valuable life policies and death in service benefit.

Alan had two things on his mind: to fulfil his duty to the client, and to advise his client’s beneficiaries, who had inherited a significant sum overnight.

Only, things didn’t go quite to plan.

Involving the family early

“I’ll never forget it. I worked closely with the family, and I worked really hard,” says Alan Marks. “But another adviser got in and did a sales pitch on the widow and children. I missed out and I’d done a really great job.”

This was an eye-opener.

“It taught me a valuable lesson. It was too late by the time I was engaging with the beneficiaries.”

“If you haven’t already built a relationship when the time comes, they won’t care about what you’ve done for the client.”

This was a shaping experience in Alan’s career in the advice industry. Nowadays, he is Managing Director at Harrison Spence, buying and selling advice practices. Intergenerational planning is now high on his agenda when advice firms turn up looking to buy or sell a book.

“The question we ask is, ‘Are you doing later life planning with all your clients?’ If I get, ‘What do you mean by that?’ I know they’re not. And if I get, ‘Yes of course, we do trusts, wills, and we meet with the children and the grandchildren, and we talk about moving assets down’, that’s when I know we’ve got a client selling a business with top value.”

The value of intergenerational planning

“An ageing client bank devalues a business,” explains Alan. “It’s just a fact, because whoever is buying the book hasn’t got as long to earn from it. That is, unless they can introduce something you haven’t done – and that something is intergenerational advice.”

“If someone looks at a book and sees ageing clients, they’ll start thinking they might lose 15% of those people.”

“Good practice is to do the intergenerational work. Meet the kids, meet the grandchildren, and build a relationship with your client’s family.”

“If you want to sell something, you get one chance to make a first impression. You could lose 15% to 20% of real value by not preparing and not spending the time. Intergenerational planning is a critical part of that long term preparation.”

Engaging the beneficiaries

Sunny Sonpal of Collective Financial Planning is one adviser who’s started to focus more on engaging with the next generation.

“The pandemic gave us time to reflect on what was going on. We lost four clients to Covid and at the same time, some of our older clients have begun to pass away naturally.”

“We had one client who passed away and his daughter, who had never engaged with me before, just took everything away.”

“I thought, hang on a second, this is a new generation coming through and I don’t think they are fully engaged in financial services or fully understand it. Do we want to lose all the hard work we’ve done to another adviser or institution?”

“I told myself I’ve got to get working with the beneficiaries a lot earlier.”

Estate planning is a great way to do this.

“What I’m finding is that when I get engaged with the beneficiaries, they’re paying a lot of attention. When they actually know what the wealth is they could inherit, they go away and do their research. Because they’re a younger generation, they will Google what I’m saying and come back and agree with what I’m saying. I know they’ve Googled it, because they’ve had no clue before and now it’s a very detailed email response. That’s fine, because the more questions they ask me, the more engaged they are.”

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