Preparing their business for the £5.5 trillion intergenerational wealth transfer expected in the UK over the next three decades will put advisers in the best possible position for future growth.

Over the next 30 years, £5.5 trillion is expected to be transferred between generations in the UK, according to the Centre for Economics and Business Research (CEBR). This amount is unprecedented and presents both an opportunity and a threat to the financial advice sector.

Whether advisers want to admit it or not, the risk of losing business from younger generations following an intergenerational wealth transfer is real. A study produced by the CEBR and Opinium on behalf of the Kings Court Trust found that 15% of financial advice practices lost 50% of the value of their assets under management following inter-generational transfers during the 2016/17 financial year.

So how can you avoid this scenario in your own business? A proactive approach is required because simply maintaining the status quo and hoping for the best could put your business at risk.

Start by flipping it so that, rather than focus on the risks, consider the potential opportunities. Savvy and nimble financial advice businesses are well-placed to capitalise on the oncoming intergenerational wealth transfer, which will be unprecedented in scale.

Before going any further, I should note I will be using the term ‘millennials’ – a label given to the generation born between the early 1980s and the late 1990s. This is a really wide-ranging group of people and, for the ‘millennials’ reading this, I realise three-quarters of you do not think the term describes you accurately.

It is a label filled with contradictions – a generation who are lazy, entitled and need to work harder yet, at the same time, confusingly, they are also the most entrepreneurial age category ever. I personally dislike the term and would use ‘younger generations’ instead, but I fear it makes me – and most of PA’s readers! – sound incredibly old.

Now we have got that out of the way, let’s consider four key elements to concentrate on:

Engage with the younger generations

The priorities and needs of generation Y and millennials will no doubt be different from the bulk of your client-base today. It is therefore imperative to engage with your clients’ beneficiaries at the earliest possible stage. Find out what type of services they would be interested in, and use this input to evolve your proposition.

I often speak to advisers who struggle to understand what makes millennials tick – and one of the best ways to solve this problem is to hire one or even a few. Having millennials on board can provide you with insight into where it makes sense to invest technology-wise and whether your value proposition is relevant for younger clients. Most of all, they can provide a ‘sanity check’ on any plans you have to target this audience.

Think about your proposition

It is likely that generation Y and millennials – aka your future clients – will be looking for a proposition that makes the best use of technology. They will want to engage with their financial adviser in the same way they do with their bank – with up-to-date information pushed out via an app and a selection of contact points that are face-to-face, on the phone and via live chat. They may also wish to feel in control of part or all of their investments, so you could consider integrating a robo-advice element into your proposition.

In addition, research continues to show growing demand for socially responsible and impact investing from this segment of clients, so it makes sense to think about how you can cater for this – perhaps by introducing screening to your investment process or by partnering with specialists in this space.

As many of you will know, projects focusing on technology or changes to a proposition tend to take longer than you expect. With this in mind, try putting a plan in place today, charting the steps that are necessary to get you to where you want to be five years from now.

Hire younger advisers

Linked to the first point, a number of financial advice firms are missing a trick by not employing younger financial advisers. The CEBR’s research found younger clients prefer to work with financial advisers within their own age group. However, 88% of practices with a book value of £10m or less have no active policy for recruiting younger financial advisers. This figure did fall to 70% for practices with a book value of £20m plus – albeit still a startling number.

Appointing a younger adviser to a beneficiary’s relationship could improve the chances of retaining them as a client in the future. After all, 25% of financial advisers surveyed by CEBR and Opinium said they believed that beneficiaries had chosen not to use their services following inheritance for one simple reason – because they hadn’t built a relationship with them. Hiring younger advisers can also provide a potential solution to succession later down the line.

Put a client retention strategy in place

Faced with this unprecedented intergenerational wealth transfer over the next 30 years, the time is ripe to put a business retention strategy in place. It is worrying to note that 25% of practices with a book value of £20m or more had no active client retention strategy, according to the CEBR research.

A business retention strategy could include the following:

Plan to engage with your clients’ beneficiaries

» Think about who is best placed to take on each relationship.

» Are there events or programmes that can help your business to develop relationships with the next generation? I have seen a number of advice firms successfully launch workshops targeting the children of their best clients.

» Consider offering a ‘financial mentoring’ service to your client’s beneficiaries.

Evolve your service proposition

»  What technological changes can be made?

»  What functionality will your clients require in the future?

»  Is it worth having an impact investment or SRI-focused proposition?

»  Is it time to introduce a robo element?

Hiring plans

» Should you hire younger advisers?

» What expertise do you need to bring in, to position your business for future growth?

No matter what you decide to do, do not make assumptions about what this younger group of clients will want or need from your advice firm. Research is invaluable in setting a strategy that will see the highest return on your investment – without tripping down rabbit holes along the way.

Looking beyond client retention, preparing your business for the great intergenerational wealth transfer will put you in the best possible position for future growth. Don’t let this fantastic opportunity pass you by.


This article was created by Abbie Knight from DISCUS. It first appeared in Professional Adviser magazine.