Leah Willis

Financial advisers who actively encourage clients’ children to be involved in the wealth-transfer process had higher retention rates and reported increases in client satisfaction, according to a new whitepaper published by Australian Ethical yesterday. 

The report found 61% advisers have clients who have already transferred wealth to their children or are in the process, with many wanting to begin the process while they’re still alive.  

Of those that initiated a wealth transfer conversation, advisers who incorporated responsible investing into their offering reported higher client satisfaction (73%) than those that didn’t (62%).

Australian Ethical’s 2023 Opportunity Next report, supported by new research from CoreData, examines the important role financial advisers will play in shaping the intergenerational wealth transfer and meeting the needs and expectations of the next generation of prospective clients.   

Almost half of advisers say they are already incorporating responsible investing into their advice value proposition.  

Australian Ethical Head of Client Relationships, Leah Willis, said it is clear advisers need to take a proactive approach to engaging with the next generation, and understand their investment values and drivers.  
 
“There’s an advantage for financial advisers in engaging early on with beneficiaries, and to help facilitate the intergenerational wealth transfer. We’re already seeing that advisers who incorporate responsible investing into their offerings report higher client satisfaction,” said Ms Willis.  

“Responsible investment principles are going to be part of conversations going forward, and being able to understand younger generations values and drivers is going to become increasingly important in attracting younger clients.”  

Almost half (47%) of advisers, who are already engaging with clients, plan to address the intergenerational wealth transfer opportunity by facilitating family conversations.

More than half of advisers agreed that advice practices that demonstrate a strong understanding of responsible investing will be able to attract younger clients.  

It’s anticipated that $3.5 trillion dollars will be transferred from Baby Boomers to their children and beneficiaries over the next two decades.^[1]   

Nearly half of the wealth transferred to children and beneficiaries is consumed almost immediately – going towards personal debt, mortgages, and luxury or self-care items to support their current lifestyles. The remaining half has the potential to be reinvested. 

“Advisers are going to be increasingly called on to meet the needs of their clients’ children and beneficiaries, who may have different values or greater focus on responsible investing than their parents did. It’s critical that advisers can have these conversations.” 

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[1] Productivity Commission 2021, Wealth transfers and their economic effects, Research paper, Canberra; pc.gov.au/research/completed/wealth-transfers

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