You’re no doubt aware of the so-called “great wealth transfer”. You might even have heard about it from us.

We passed on three simple lessons on the importance of intergenerational planning back in autumn of 2023. That article looked at the importance of early planning, communicating wishes between generations, and the concept of “giving while living”.

There is, though, more that advisers can do (and are doing) to bridge the generational gap.

With an estimated £5.5 trillion set to pass between generations over the next three decades, ensuring a smooth transition is a challenge, but one where expert financial advice can help.

Keep reading to find out how.

The great wealth transfer will see large amounts of money change hands so education will be key

A recent FTAdviser report finds that more than £24 billion is gifted each year, with many recipients classed as “younger adults”, aged 25-34. Common reasons for wealth transfer include a marriage and the purchase of a first home.

It’s important to remember, though, that the first transfer of wealth is likely to be between partners. In opposite-gender couples, this will likely mean money moving from a male to a female partner. Indeed, FTAdviser reports that 60% of wealth could be in female hands by 2025.

Managing financial matters often falls to just one partner in a relationship. For older couples, this is more likely to be the male. But what happens when the man dies?

While the deceased might have had a long relationship with a financial adviser, this is no guarantee that a surviving spouse will maintain that relationship. Children, too, might have their own ideas about money management.

This is where intergenerational planning can be so important. A consistent approach with engagement from multiple generations gives all parties the best chance of a hassle-free and tax-efficient transfer of wealth. It also ensures that everyone’s wishes are considered.

Engaging multiple generations from the outset helps to ensure a joined-up and tax-efficient approach

Your clients will have worked hard to amass their wealth and they’ll be keen to pass it on in a way that aligns with their wishes.

This might mean using a will to ensure an estate is inherited by the correct people but might also mean giving while living. Professional Adviser reports that 90% of UK adults plan to pass money to loved ones, with:

• 51% planning to gift a living inheritance

• 39% planning to pass wealth on when they die.

And yet Professional Adviser also found that 32% of baby boomers (those born between mid-1946 and mid-1964) were reluctant to pass their wealth onto someone with a different attitude to money than them.

Again, advice and education can help here – on both sides.

Younger generations are generally very financially engaged and happier to talk about money than their parents are

While money is often considered a taboo subject in families, recent research suggests that this is a much bigger problem for older generations than those who have followed.

Money Marketing confirmed back in 2022 that those aged 18 to 24 years are the most willing to engage in frank money conversations. And it’s a trend that has continued.

Standard Life finds that two-thirds of Gen Z are comfortable discussing their financial situation, whether with friends or family. Indeed, they even have a name for it.

“Loud budgeting” is a concept popular on social media that involves being open and honest about your financial situation. If Gen Z are saving for something, or they simply can’t afford to go out, they tell their friends so. This makes budgeting easier and also means that this generation is particularly transparent where money is concerned.

Gen Z has also coined other new terms for familiar financial concepts. The principles behind so-called “doom spending”, “soft saving”, or “cash stuffing” might not be new, but the important thing is that this younger generation is engaged.

The next step is to channel this engagement into the regulated space and away from the “finfluencers” who dominate social media.

Intergenerational planning can encourage harmony and help avoid disputes

Long-term financial planning works best when there is a clear goal, and every party is aware of the route to get there.

Intergenerational planning, overseen by regulated professionals, can ensure that each time money is transferred the process is tax-efficient, in line with the relative party’s wishes, and considers the multi-generational “bigger picture”.

Open and honest communication is key, along with compromise on both sides and at Boolers we can help.

Get in touch

If you have clients who would benefit from taking an intergenerational approach to their long-term financial plans, please get in touch with our team of Chartered professionals. Email enquiries@boolers.co.uk or call 0116 240 7070.

Please note

This article is for information only. Please do not act based on anything you might read in this article. All contents are based on our understanding of HMRC legislation, which is subject to change. The Financial Conduct Authority does not regulate estate planning, cashflow planning, tax planning, Lasting Powers of Attorney, or will writing.