Zurich’s recent Intergenerational Advice Masterclasses not only brought to advisers deep research, practical solutions and a process to the challenge of becoming the “family adviser”, but also created a forum where advisers shared their endeavours, successes and failures in the quest to become the central hub in a client’s tribe.

In part three of a four part series the dialogue of these Masterclasses is shared to drive an increase in the number of Australians seeking financial advice by tapping into the most powerful institution an adviser can have a positive influence on the family.

Traditionally the advice proposition has centred on being able to provide an investment solution for a lump sum retirement benefit that was to be invested relatively conservatively to provide income for the duration of the client’s life. That lifespan was in relative terms short and easily accommodated by even moderate rates of return.

Today at the age of 65 the average person will live a further 18 years. Longevity of capital is now a major concern and that’s not the only thing that has changed for the relevancy of the advice proposition.

According to research by Accenture, today’s affluent Boomers’ attitudes toward aging are different from their parents’ generation[1] . Boomers are experiencing better health and life outcomes and expect with their good health to be able to travel and in many instances remain active contributors to the community be it by continuing work or in vocational activities.

These changed circumstances mean that their heirs may in fact not only receive any inheritance later in life (due to the increased life expectancy of the boomers) but that the longevity of any income stream the boomers are reliant upon may be challenged.

This is in contrast to the seniors who traditionally looked to maximise the legacy they were to leave to the next generation.

Research also indicates that boomers are not only spending down their wealth but looking to distribute it now based on the want to influence and enjoy the younger generation’s use of this wealth. The National Seniors Productive Ageing Centres 2012 report quantified not only the amount of money changing hands from the post 50 year old age group to the family but also monetised the time changing hands, that is, the amount of unpaid support in time given to family members. The report showed that each year $53 billion dollars of time and money is already changing hands.[2]

What does all this mean for advisers? First, the implications of longer life expectancy and different attitudes towards retirement mean that advice businesses need to prepare for clients who require longevity from their funds and whom may continue to work past retirement age. Their need for more complicated strategies as well as considering tax and estate implications requires a different proposition from tradition retirement planning.

Second, not only may the heirs, perhaps an advisers gen X clients, have to wait longer for an inheritance, they in fact might not get one at all, thus raising the need for more advice around cashflow management, debt recycling as well as aged care expertise; yes these heirs may in fact rely upon their advisers to help them navigate aged care solutions including how to fund it, for their parents. The reality is also that some heirs will not stand to inherit the full value of the Boomers’ current portfolios.

So for an advice business two different value propositions may need to be formed and capabilities built around them. Not only are boomers different in their attitude to advisers (they favour the advice led model, whilst gen X’rs have a more collaborative approach) but the needs of these groups are becoming quite divergent. Businesses will need to adapt their value pitch, build capabilities and have the right services tailored for each group to truly engage and differentiate to attract these clients and importantly to retain them.

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[1] Accenture Wealth and Asset Management Services, 2012, The Greater Wealth Transfer.

[2] National Seniors Australia, 2012, It’s not just about the money: intergenerational transfers of time and money to and from mature Australians

Click here to view Video: The intergenerational advice challenge and solution – Part 1

Click here to view Video: The intergenerational advice challenge and solution – Part 2

Click here to view Video: The intergenerational advice challenge and solution – Part 4

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