This is the generation of the ‘great wealth transfer’. Over the coming decades, trillions are set to be passed into new estates.

Although it’s a significant opportunity for advisers, they’ll need to carefully consider the circumstances of those at both ends of the wealth transfer journey. They’ll also need to look at investing in building relationships that span the generations.

To uncover some of the issues around intergenerational wealth planning that advisers may face, we conducted a broad survey of more than 1,000 consumers and 300 advisers. One of the most startling findings was just how much the generations’ differing attitudes to money colour their wealth transfer decisions.

And our findings suggest that, on the whole, the UK population may be prudent. Over half (58%) of those we spoke to say they prioritise making financial sacrifices for their future wellbeing, while just under a third (31%) say their priority is to live life to the full now and think about the future later.

Generation Z are most likely to spend in the ‘here and now’
Our results also highlight a finding that should be of particular interest to advisers. They show that Generation Z,16-26-year-olds, are far more likely to spend in the ‘here and now’ then baby boomers, those aged 58-76 (39% compared with 22%). These findings are evidence of a stark generational divide and could prove to have significant implications for advisers dealing with wealth transfer. Results also reveal the startling finding that a third (32%) of baby boomers are less likely to pass their wealth to someone with a different attitude to money than them.

Although firms will need to navigate the generations’ vastly differing attitudes to money that these findings highlight, wealth transfer is a natural opportunity for advisers to look to secure the long-term success of their business. This is particularly where it involves wealth transfer to younger generations as by retaining younger family members as clients, firms can both satisfy demand for intergenerational advice, and help retain a family’s assets within their business.

Encouragingly, the research findings show that advisers are steadily building these intergenerational bridges. Nearly nine in ten (87%) of the advisers we surveyed have a relationship with their clients’ children, grandchildren, or both. Not only that, just over a quarter of advisers (29%) told us that they have relationships with more than one family member for more than half of their client base.

Helping to ensure good outcomes for all

Perhaps unsurprisingly, during their lifetime or upon death, around 90% of the consumers we spoke to plan to pass money on to their family or friends. 51% plan to pass money on during their lifetime than upon death (39%). And the single most common way they plan to pass most, or all, of their money on is by lifetime gifting to the generation below, e.g. children, nieces or nephews (28%), followed by passing it to someone in their own generation, e.g. a spouse or partner upon death (23%).

Of course, at the core of intergenerational wealth transfer and to help advisers to continue to ensure good outcomes for all, is talking to family generations together. As many families and friends may be spread across towns and cities, receiving advice remotely may be more convenient and attractive for all demographics. And the coronavirus pandemic was a catalyst for widespread use of digital tools – such as video calls – to deliver advice remotely.

Advisers have a critical role to play

While younger generations’ attitudes to money may be different to those older than them, they’ll still need support in managing any inheritance they receive in line with their financial priorities.

And advisers have a critical role to play in helping clients to transfer wealth in ways that accommodate their concerns, demonstrating their value and providing that peace of mind at the same time. For example, trusts are one way clients can gain more control over how they transfer their wealth but they can be complex to set up.

The support of an adviser will be vital in helping clients to understand the range of solutions available, while giving advisers the opportunity to develop connections across the generations for the long term.

Take a look at more of abrdn’s research findings that reveal further insights for advisers.

Read more about abrdn Wrap’s Junior ISA which offers a tax efficient way to save and invest for eligible Juniors.

United Kingdom (UK): Issued by abrdn Investment Management Limited which is registered in Scotland (SC123321) at 1 George Street, Edinburgh EH2 2LL and authorised and regulated by the Financial Conduct Authority in the UK.