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Intergenerational advice demand surge needs adviser skills shift

  • More than half of advisers say demand has grown in the past year and nearly 90% expect it to grow over the next five years
  • But advisers believe they need to develop skills and strategies to address opportunities, AKG research briefing shows

Intergenerational financial planning is set to expand in importance for advice firms – but advisers recognise the need to develop skills and toolkits to deliver compelling services to clients and families, new research from analysts AKG, in its independent briefing Advancing Intergenerational Planning Opportunities shows.

More than half (54%) of advisers say demand for intergenerational planning has grown in the past year, with 8% saying it has increased significantly, and that rises to 88% when asked about demand over the next five years, with 25% expecting significant growth.

The expansion in demand however will mean change for advisers, the study found. More than two out of five (44%) are concerned about potential family disputes while 38% are worried about possible vulnerable client concerns and 24% admit a lack of expertise in legal issues.

The research briefing, published today, can be downloaded here and the project has been carried out with sponsorship from Canada Life and Charles Stanley.

AKG’s Communications Director, Matt Ward said: “The development of training and compliance modules within firms which support and enhance the ability of the adviser to address and tackle the core issues of vulnerable clients and family disputes will be vital.

“Similarly aligned processes which continue to maintain best practice and ensure the recording of all interaction and issues will be needed to provide solid audit trails. There is also a requirement for development of empathic relationship and soft questioning skills, and a need to broaden factfinding to bring family hierarchy, goals and issues into play.

AKG’s research found 59% of advisers believe greater awareness of the impact of inheritance tax is driving demand from clients while 40% say changes in pension laws to make funds more attractive as a way of passing on wealth is adding to the growth in demand.

However more than two out of five (42%) of advisers say they are now proactively discussing the issue with clients and over a quarter (29%) say the COVID-19 pandemic has increased interest in inheritance planning and financial reviews.

Sean Osborne, Group Head of Sales, Charles Stanley, said: “The reasons why families are reluctant to have open conversations about intergenerational wealth planning are obvious. Many do not want to think about the loss of loved ones – and the fear of bringing conflict into the family is a real deterrent. However, the Covid-19 pandemic has started to change this – acting as a catalyst for these conversations as people look at the uncertainties the future may hold. Now feels an ideal opportunity to engage with families around some of the key planning opportunities to secure their own and their family’s future.”

The briefing highlights how the increased use of online meetings during the pandemic has meant that family discussions with advisers have become easier to organise and for some the client relationship has moved beyond the primary client to spouses and partners as well as other family members.

Sean Christian, MD and Executive Director, Wealth Management Division at Canada Life, commented: “Intergenerational wealth planning presents a huge opportunity, but it isn’t an open goal. Wealth accumulated in property and other assets will reach trillions of pounds in the coming decades and advisers will need to have strategies to manage this wealth through the generations.

“Investing in softer skills, working closely with providers who offer holistic solutions, and keeping up to speed with the technical aspects of trusts and estate planning will keep advisers one step ahead.

Background

One of the emerging themes from AKG’s 2020 research paper on the Future of Advice was what appeared to be a clear opening for the further development of advice and planning propositions in the intergenerational space.

And hence in its latest briefing Advancing Intergenerational Planning Opportunities AKG has explored the potential for intermediary firms to further develop these intergenerational planning opportunities and better understand associated challenges.

The aim of this project is to provide an understanding of:

  • the nature, scope, and potential of the opportunity for intergenerational advice and planning services
  • the drivers for demand and growth
  • the potential barriers to engagement, development and the associated issues raised
  • the processes, skills and approaches required for success
  • where intergenerational planning will fit in the advice landscape of the future.

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