Advisers unprepared for £300bn of wealth transfer due to occur over next decade

Research commissioned by investment management group, Brooks Macdonald, reveals that financial advisers could become out of touch with the changing demands of inheritors in the UK as £327 billion is set to be passed from baby boomers to around 300,000 younger potential clients over the next decade.

Because of this, advisers who are not prepared and do not regularly engage with inheritors face significant and growing threats to the sustainability of their client relationships. The research showed that 60% of inheritors were not satisfied with their advisers, while 53% of inheritors were either not sure or wouldn’t use the adviser of their donor.

Crucially, almost half (46%) of advisers do not have any relationship with their clients’ children, even though they are the ones who generally inherit the greatest proportion of the donor’s wealth. More than a third (38%) of inheritors have not discussed inheritance with an adviser, leaving a large proportion of inheritors in need of advice.

The research, which was conducted by independent company, Wealth-X, found that:

• Inheritors place less value on relationships, reputation or recommendations than advisers think they do.
• Inheritors place greater importance on the range of investment products offered and the performance of those products than advisers think.

While advisers recognise the importance that inheritors place on investment expertise and cost, many do not recognise the increasing demand from inheritors for superior technological capabilities.

Robin Eggar, Co-Head of UK Investment Management at Brooks Macdonald, said: “It’s clear that in some cases there is a disconnect between what inheritors want from an adviser and what advisers believe they are looking for. With over £300 billion set to be inherited over the next decade, and over 50% of inheritors not sure they would use the adviser of their donor, the importance of closing this gap has never been greater.

“Advisers must recognise the difference in demand across generations in order to provide the advice their clients need, in a manner they want. Ultimately, this will be necessary to futureproof relationships and give them access to a new generation of clients. While adapting to this changing landscape will bring its own challenges, it will also present significant opportunities to support IFA’s future growth by improving engagement with inheritors.”