The importance of a wider perspective in Estate Planning

A lot of content has been produced about the rise in the already high levels of wealth transferring through the generations over the next 25 years. According to the King’s Court Trust, annual intergenerational wealth transfers will increase from £69 billion in 2017 to £115 billion in 20271, with a total of £5.5 trillion changing hands in the UK between 2015 and 20452, making estate planning a potentially very lucrative area for advisers to be engaged in. 

Apart from the importance this places on good estate planning advice, it also presents a number of considerations and opportunities for advisers around the retention of clients and assets under management once the funds have passed to the next generation. The follow-up report from the King’s Court Trust found that 15% of IFAs reported losing more than 50% of the value of assets under management that have been through intergenerational transfers in the last financial year, with 34% reporting losing 20% or more3

25% of IFAs reported that one of the reasons beneficiaries chose to take business elsewhere was the lack of a relationship with the deceased’s IFA4. Family loyalty is often less important to the younger generation than historically has been the case.  They are more concerned about price and service and are happy to shop around to get the best deal, as they would for a mobile phone or electricity contract. Considerations such as digital access and delivery methods of advice may also now be a differentiator, so ensuring you and your practice are getting up to speed will be important. 

One way to combat the lack of a relationship with the younger generation could be to engage with the beneficiaries of the estate during the planning process. This can make any transition after death smoother and enable you to demonstrate the value-add that a good financial adviser can offer. By establishing contact and communication at this point, relationships can be built and the reasons behind any planning plus the benefits to the individual and the beneficiaries can be understood and appreciated. It also more easily facilitates any assistance needed during the probate period, again promoting the value of the relationship. 

Another reason to engage with the next generation earlier is the opportunity to understand what the drivers behind their own investment approach might be, post inheritance. For example, impact investing, sustainability and clean energy investing are all areas that are generally valued much more highly by millennials than previous generations (albeit they are growing in importance across all age demographics). Alternatively, it could be that the beneficiaries may have no interest in investing at all, but you may find that ESG and impact investing are more engaging for them, giving you the chance to retain funds under management that may have otherwise been withdrawn.  

For those future potential clients that are keen to continue investing their funds, the greater ease of carrying out research online, compared to previous generations, means that specific investment advice may now be of less perceived value. Being able to demonstrate the value of more complex planning solutions with a thought through and well researched investment strategy suited to their family circumstances could be the hook that retains those funds in the future.  

In summary, as the wealth of the baby boomer generation gets passed on, those advisers that are able to properly engage with the next generation and offer more than just basic estate planning for clients are most likely to reap the rewards in the long term. 

[1] ‘Wealth Transfer in the UK’ – Kings Court Trust -

[2] ‘Wealth Transfer in the UK’ – Kings Court Trust -

[3] ‘Passing on the Pounds’ – Kings Court Trust -

[4] ‘Passing on the Pounds’ – Kings Court Trust -