It is anticipated that over the next decade more than £300bn could be passed from wealthy babyboomers to less financially secure millennials. With an ageing population and rising levels of wealth, the UK is set to see substantial growth in the number of inheritance transfers and financial gifts taking place each year.

It has been labelled the greatest wealth transfer in UK history, yet in many cases millennials are ill equipped to manage it and boomers reluctant to include them in the transfer process. Advisers have the opportunity to play a key role in ensuring this wealth is transferred successfully.

A key consideration is the relationship advisers have with their clients’ children (future clients). There are both push and pull factors at play; the younger generation may not be interested and the older generation may not want them involved.

But the pandemic has helped highlight the need to plan for the future, pushing many clients to think about how they will pass on their assets, and so looking at subjects such as illness and death.

 

Adviser Opportunities

As an adviser then an open and frank discussion with your clients is imperative, and this includes discussing topics such as Wills, Trusts, Lasting Powers of Attorney and Probate. All of this requires an in depth discussion to help ensure your clients and their wealth is distributed accordingly. Widening this discussion to include other family members is not only something that can benefit the client but can give you the added opportunity to develop a relationship with those family members.

Plus by not discussing intergenerational wealth and making plans, a hefty inheritance tax bill could be incurred.

A Will plays the part of setting everything out for wealth transfer, it is the basis upon which other requirements can be structured around by giving clear intentions. A Will can incorporate many facets which can provide the right structure for wealth transfer to meet client needs.

Gifts are often the first port of call for wealth transfer. The annual gift allowance can be rolled over into the next tax year if unused and gifts of any size are IHT free if the donor survives seven years and less than their lifetime nil rate band tax allowance. The tax rate applied on them does attract tapering relief after three years and after 7 years the liability on the gift is nil. This is always a risk because people have no certainty on when they will die, but start early enough and it is a useful option.

Trusts are still widely used, even if they are not as tax efficient as they once were but, if used properly, can potentially save hundreds of thousands of pounds.

The clients circumstances also need to be considered, for example, it is also possible to ring-fence funds in the event of divorce, so an estranged partner does not end up pocketing half the wealth. This is an important tool in reducing intergenerational conflict.

Getting the right documentation in place and signed correctly is also critical. Lockdown has prevented a slight barrier in this instance to the witnessing of wills, etc, but as restrictions ease then more opportunities come into play to have those reviews with clients and get to the detail of their future planning.

 

All of this will help later down the line with probate and the handling of estate administration. The more accurate requirements are handled now the smoother the process once a client passes away.

 

Growing your client base

If you have an established and trusted relationship with your client then you would hope it would be natural for you to help their loved ones finalise their affairs when they’re gone. By providing a trusted estate planning option, you can prepare your client and their family for what lies ahead.

The discussion entailed for a will and estate planning can help you bridge the gap between your client passing away and establishing a relationship with their beneficiaries, so enabling you to generate additional revenue.

Creating this link now means that when the time comes you are able to offer advice and support upon your client’s death which may help you to establish relationships with the beneficiaries and retain funds under management. They will appreciate the advice about the next steps at the difficult time of losing their loved one. On average, there will be nearly four beneficiaries named in a Will, allowing you to build a relationship with them through offering financial advice about their inheritance, with the ultimate goal of gaining them as new clients.

Furthermore, you may reduce the average age of your client bank as beneficiaries of all ages can inherit from an estate. Many beneficiaries will inherit on top of their own wealth so you will also have the chance to increase your funds under management.

Additionally, if you have conversations about estate administration with your clients during their lifetime, they may turn to you if they are named as an Executor. For example, they may be named as an Executor and a beneficiary of their parent’s estate, giving you the chance to gain more funds under your management.

 

Possibilities

Each year, 1% of the population passes away which equates to approximately 550,000 deaths. 50% of these estates will require probate due to the type of assets or value held at the date of death, and 70% of these estates will use professionals to do some or all the work on their behalf.

To put this into perspective, based on average estate values, if you take a client base of 200 clients who statistically will each have 1.2 living parents and 3.66 beneficiaries per estate, there is an opportunity to gain 16 new clients and £3 million in funds under management, per annum.

 

End-to-end support from BTWC

BTWC’s Estate Planning service enables you to provide a wide breadth of estate planning options for clients. You have the choice of how you present those options, whether as an introducer or as a will writer. But either way both yourself and your client will benefit from end-to-end support from the writing of the will, through to the probate and estate administration, if so required. We provide all the technical knowledge and help manage all documentation for a seamless service offering for you to present to clients.

We’ll help you identify further opportunities and how to identify if a client needs to consider a trust or if they require IHT advice.

 

Call 01522 500823 to discuss any client needs, and remember the client always remains yours!