‘The Great Wealth Transfer’ is the transfer of wealth from the Baby Boomer generation – a process that Forbes magazine described as the ‘greatest wealth transfer in history’. How are you planning to work with your clients to ensure they get the best outcome for their family?
Intergenerational Wealth Planning
Intergenerational wealth transfer is the movement of wealth between generations and intergenerational wealth planning is the strategy that ensures that the process unfolds smoothly, ensuring long-term financial security for clients and their families.
Warren Buffet once said, “Someone’s sitting in the shade today because someone planted a tree a long time ago”. The quote is particularly poignant when it comes to intergenerational wealth planning
The Bloomin’ Boomin’ Boomers
The Baby Boomer generation has experienced one financial boom after another over their lifetime, with rising property values and investment growth dramatically increasing their net worth. Of course, we’re also living longer than previous generations, giving Baby Boomers more time to accumulate their wealth.
How much are we looking at?
Well, the numbers are staggering. The wealth transfer in our little corner of the world alone is expected to involve well over $1 trillion of assets. Transactions of this scale obviously have many implications.
Let’s step through our top three.
1. Families can be complicated so establish a roadmap
Establishing a robust roadmap is really important. Your client will be in a much stronger position to control their finances by having a plan around what will happen to the money, and who will be involved. This is the best way to avoid surprises and ensure your client’s goals are managed and met.
2. Involve the family
Lots of people find it difficult to talk about money with their family, especially when planning for a time when they’re no longer around. But, when it comes to successfully passing on wealth, it’s vital to involve them in the process. This includes introducing the family to the adviser. This transition takes time, so it’s important to start early and ensure there’s plenty of time for all family members to get to know the adviser.
The first transfer of wealth is usually between spouses. Often the next generation will step up to help, taking over the management of the family’s finances from their parents. This is done through their involvement in a family trust, or via the use of Enduring Powers of Attorney.
3. The sooner you start, the more you can do
With intergenerational wealth planning, sooner is always better. Working with an adviser, the client can start by identifying their own needs. This process is about enhancing their retirement through sound planning which ensures you’re not left short. A good adviser should help identify goals, model their needs and recommend sound strategies. Forecasting will help develop a clearer picture of what the future could look like – the last thing anyone wants is for the client to say ‘If I’d have known, I would have done more!’
Final thoughts
Finally, remind your clients that they don’t have to be confined to the strategies that unfold after they’re gone. Help them understand there is nothing quite like the joy of giving, and many of our clients get great satisfaction from transferring money and gifting while they’re alive. These can be large or small – from a grandchild’s first investment fund to a helping hand getting the next generation started on the investment ladder.
Who says your client can’t enjoy watching their family in the shade of that tree they planted?
