When should this planning begin?
When it comes to intergenerational planning, the earlier you start working with your clients, the more you can do for them. You may also find your clients can afford to start passing on their assets earlier, rather than waiting until after they die.
As a financial planner using cashflow analysis, you can explore different scenarios with your clients. If a client is wondering whether they can go on more holidays or whether they can afford to pass on more of their assets now, you can see and demonstrate how these options could affect their finances, allowing them to make decisions earlier.
Aligning client values
When looking to pass on their wealth, clients are almost always looking to benefit the next generation financially. But they now have the ability to go a step further.
Global trends have shown a significant shift in sentiment in the younger generations towards making sustainable choices. We have found that many next generation wealth recipients, particularly ‘Millennials’, are becoming much more aware of their environmental, social and corporate impact. As such, they are generally very interested in Socially Responsible Investing (SRI). This is an investment strategy which seeks to consider both financial return and societal good.
As a result, when these family conversations around wealth transfer begin, as financial planners we are seeing more investors choosing to invest their assets in a way that their younger relatives will approve of – as it will be those relatives who take over the assets in time.
Making sure clients have these discussions with family members ahead of time forms a crucial part of intergenerational wealth planning. By helping them to invest in a way that aligns to their beneficiaries’ preferences, you are saving their beneficiaries both time and hassle in the future when they inherit the assets.
Summary
As with most things in life, the sooner clients plan, the better the outcome can be. When clients begin considering what will happen to their wealth when they are no longer around, they will always benefit from the input of a financial planner. The key driver for many clients is that they do not have to make any sacrifices in their retirement; it’s still their money, but it ends up in the right hands, as mentioned at the outset, in line with their wishes.
As a financial planner, the best advice and service that you can provide to your clients is where you meet the beneficiaries as well and are able to ensure that they are fully informed and know more about their money and what any gift might mean for all concerned. By including their family in the planning process, you can reassure your clients that their beneficiaries will be in safe hands after they are gone.
[1] Source: King’s Court Trust (https://www.kctrust.co.uk/partner-blog/blog/2018/wealth-transfer-in-the-uk-research-highlights)
