In this exclusive Q&A, Vince Smith-Hughes, Director of Specialist Business Support at M&G Wealth, sat down with IFA Magazine’s Brandon Russell to discuss the company’s approach to intergenerational planning and the findings of their latest Family Wealth Unlocked Report.
M&G Wealth’s Family Wealth Unlocked report is now in its third year. It looks at the financial habits of 2,000 UK adults who personally use or have a family member who uses, a financial adviser. According to this year’s report, long-term finances could be impacted by a contraction in conversations today, with the research finding that individuals are not planning ahead and could be missing out on finding financial solutions.
In this Q&A, Vince Smith-Hughes discusses not only the importance of intergenerational planning for advisers and their clients, but also some of the ways in which M&G Wealth can help advisers in this space through a suite of useful resources which are freely available.
IFA Magazine: Could you remind readers what M&G Wealth does?
VSH: Sure. M&G Wealth is our brand that supports advisers and financial professionals regarding our long term investment solutions, both on and off platform.
IFA Magazine: Why is intergenerational planning such an important subject for both clients and advisers?
VSH: It’s an immense subject now. Research tells us that there is around £5.5 trillion of assets going to be passed down the generations over the next 30 years. There was also over £7 billion paid in inheritance tax receipts during the last tax year. Both of those numbers suggest to me that it’s an area which really needs a lot of attention by advisers.
As far as clients are concerned, I think there are two main things we need to think about. The first one is to help them to mitigate inheritance tax as much as possible. But it’s a bit more detailed because I also think that clients are going to want to make sure that the money stays in control of the right people within their families.
We’ve all heard the stories about the 18-year-olds who get their Junior ISA proceeds, then when they get to University for Freshers Week, they waste it all. Their relatives might decide that’s not appropriate and really want to make sure that they are keeping control of the money where it’s supposed to be and being used for the purposes intended.
As far as professional advice is concerned, advisers have built strong businesses around assets under management. When you hear the numbers I talked about at the outset, passing down the generations, it makes you realise why it’s really important for them to be able to maintain control over those assets.
It’s not just about helping the clients. Yes, that’s a primary concern and making sure their wishes and ambitions are fulfilled, but there is also a business concern for advisers to make sure they retain control of the funds under management too, and making sure they are still in business to help the next generation of clients and the ones after that.
IFA Magazine: At M&G Wealth, you’ve recently revealed your latest Family Wealth Unlocked Report. What are the key learnings which stand out for you this year?
VSH: As always, there are many key findings of the report: it’s a detailed piece of research. An important finding is that the advice which families receive is really respected and valued by those people. Virtually everybody who responded to our survey said that they benefited from having worked with a financial adviser. This is the third year we’ve done the research, and you can see the numbers here really start to tick up. The number of family-sharing advisers has grown by another 5% this year. It’s a good sign.
It’s clear that clients find that it provides the best value for the family, and they value the control over where the money is actually sitting. Let’s not forget, this is a survey of advised clients. The real thing that comes across to me is how much it’s actually valued. Yes, there are nuances year-on-year, but it seems that every year there are more clients who are actually seeking professional advice from the same advisers. That has to be a good thing, especially if we’re ever to close the advice gap.
IFA Magazine: What resources can M&G Wealth provide to help advisers in this space?
VSH: I’d argue that our Family Wealth Unlocked report is becoming regarded as a flag in the ground for intergenerational planning.
Also, we provide lots of useful technical assistance for advisers and paraplanners on some of those thorny questions, because it can be complicated. This technical help we provide takes many forms. It can be accessed online via our tech centre on our website, but also for advisers who have really complicated cases, they can contact their account manager to arrange to speak to our technical team who can really help them. They’re pension, trust and tax experts who can really help advice professionals to get to the right solution. It’s a support which continues to be very popular with advisers.
We’ve also got many client-friendly blogs on a range of topics that advisers can use. They’re able to take that information and use it directly with clients, something which again advisers find useful.
Another thing that springs to mind is that we’ve got a really good trust and inheritance tax modeller which can really help advisers to look at the benefits on a bespoke individual basis. We launched that a little while ago and it’s proved to be really popular.
There are also products and features which enable intergenerational financial planning. For example, on our platform we’ve got family linking which can help reduce the costs overall of family investing. All in all, it’s a really good package of benefits that advisers can use, some delivering practical help, some via technical help and some bespoke calculators which can also assist.
IFA Magazine: Are you able to help advisers who would like to expand their services into this intergenerational model?
VSH: We quite often get asked by advisers, ‘how can I get into this market?’ There are many easy ways to get things underway. Firstly, advisers can start raising the subjects of creating up to date wills, power of attorneys and expression of wish forms on pensions with their clients. Doing so will then usually bring in the next generation of the family. Once you’ve got that next generation of family involved in conversations, you can broaden it out. However, those three subjects alone will automatically start making clients think about the need to get other members of the family involved in planning. It’s surprising the lack of attention that is often given to those three very critical areas – they’re so simple, but form such an important bedrock of sound financial planning in practice. I’d strongly encourage readers to check out the report and also then to think about how they can develop their client proposition in order to maximise engagement across the generations.
To download your copy of the latest M&G Wealth Family Wealth Unlocked report or to view the support we have on this topic please visit:
Family wealth planning hub >https://www.mandg.com/wealth/adviser-services/family-wealth-hub
