As part of our research for Fidelity’s IFA DNA series (available to download free here) I spoke in-depth with advisers and chief technology officers (CTOs) at adviser firms about how they help clients manage wealth transfer.

Nearly all spoke about realising the potential of tapping into and developing longer term relationships with the children and inheritors of wealth-holding clients, but there is tension in that engaging with younger clients is seen as a challenge by many advisers.

Three issues stood out for me from my conversations:

1. Wealth transfer is very varied between firms.

There is a range of structured vs unstructured approaches across different firms, as well as levels of formality and informality involved in processes and client interactions.

Some firms make it part of their core proposition to involve the younger generation as early as possible in inheritance discussions, whilst others see those conversations as something that should be more organic, arising naturally when future clients ‘need’ specific advice.

2. Ambitions for wealth may be entirely different from one generation to the next.

Nearly all advisers I spoke with highlighted that the goals of wealth vary between generations. New clients need to perceive that the role of a financial adviser is relevant – in an age of DIY wealth management, this is increasingly important to understand.

3. Knowing how to tackle the conversation often leads to procrastination.

Differing ambitions adds complexity to the wealth-transfer dynamic, which, as most of the advisers I spoke with candidly attest, is better tackled sooner rather than later, while both parties are ‘present’ to work through differences. Having a clear process to do this however, is something that is often lacking.

Our research highlighted the factors advisers need to consider when shaping intergenerational wealth-transfer solutions.

Two of these are:

• How segmenting clients by goals, attitudes and needs, over and above demographic credentials leads to a more targeted approach to attracting the next generation.
• The importance of conveying to current clients that their goals and the sense of responsibility around their wealth has been understood and respected and that solutions have been tailored to meet both theirs and the future generations goals.

In my conversations, it feels like there this is one area where intergenerational wealth transfer falls down most easily and where there is clearest opportunity for training to play more of a role in enabling advisers to bridge the generational gap.

No time to lose

Effective intergenerational wealth transfer not only helps to retain existing clients, it creates opportunities to attract new clients that will help future-proof the business. Importantly, it’s also a way of proactively evidencing compliance with the spirit of new Consumer Duty regulation.

If you’ve been putting off having that conversation with a client about how they see their wealth working once they have gone, it’s time to act. After all, nobody can take it with them.