It’s estimated that $3.5 trillion of assets will change hands by 20501 in what’s being dubbed the ‘silver tsunami’ . Navigating generational differences and diverse family structures, as well as managing fears around money going the distance is a delicate balancing act. Navigating the challenges of intergenerational advice starts with a strong foundation of trust.
The vital role of trust
Considering how to distribute wealth is a deeply personal and emotionally charged decision. It’s vital that clients have a strong level of trust in their adviser. Building on the Australian Retirement Trust Adviser Insights Research Report 2022,2 in the 2024 insights, clients ranked trust as the best thing about their financial adviser.3 They need to feel safe that the best interests of their family are prioritised before discussing wealth transfer.
The role of trust becomes even more important when working with multiple generations. Many advisers already provide financial advice to several people in the same family. 74% of ART clients surveyed say that having an adviser who is trusted by their family is important. But trust does not necessarily equate to loyalty. The research shows that it’s not as important for people to have the same adviser as other family members.
Retirement is the focus of advice relationships
With 710,000 Australians looking to retire in the next 5 years,4 older clients are focussing on retirement planning, with advisers highlighting that retirement is the focus of advice in 69% of cases. They want to ensure they have enough money to enjoy retirement and live comfortably. Research confirms that a recurring feature of a satisfactory retirement for clients is the presence of a plan for retirement or a plan for asset consumption in retirement.5 However, how and when to distribute wealth to beneficiaries appears to be a blind spot for clients.
Whilst advisers say that wealth transfer is important to the majority of their clients, just over one third of clients make it a priority. Uncertainty about the future, cost of living and rising costs of care means that wealth transfer discussions take a back seat.
There’s a clear perception gap that advisers can help address. Clients need guidance to see the connection between retirement planning and estate planning. Building wealth and not having a plan on what to do with what’s left is a recipe for disaster.
Helping clients see the importance of wealth transfer
Advisers are coaches. They’re teachers, mediators and sounding boards. Clients expect advisers to have technical and strategic planning skills. What clients really want is their advisers to know who they are. To understand and help them work through their values, hopes, desires and fears.
The importance of wealth transfer can only be addressed through a trusted relationship.6 Clients don’t know what they don’t know. And while clients are focussed on ensuring they have enough money for retirement, it’s up to advisers to help them see the value in planning what to do with what’s left. If clients are hesitant to discuss this, it could point to underlying longevity fears.
Fears around longevity often stem from deeper anxieties about security and loss of control. Using emotional intelligence to help clients address these fears means beginning discussions with empathy and active listening. Consistent and transparent communication provides reassurance, builds trust and a feeling of safety. Clients feel heard and valued, which continues to build trust over time.
Numbers and projections also help paint a clear picture for clients and advisers who can address their client’s unspoken fears around those numbers with a gentle, empathetic hand build trust, comfort and confidence for older clients.
There’s also a hesitancy to discuss wealth transfer with beneficiaries. There may be fears around family dynamics, clients being taken advantage of and money changing the nature of relationships. As outlined in the latest ART insights, some older clients worry that their children will start to see dollar signs once they fully understand their asset base, and it will affect their relationship going forward.
Helping clients work through these fears can reduce the anxiety of starting wealth transfer conversations. Encouraging open, structured family conversations is the first step. Advisers can help mediate family discussions, framing conversations around family values and legacy. This makes it less about money and more about shared goals.
Managing complex environments
Tax minimisation, gifting strategies, managing trusts, preserving wealth and working out the right time to distribute wealth are some of the complexities involved in intergenerational advice. There are also diverse family units, relationships, and people’s weird and wonderful quirks to manage.
Regular family meetings, where all parties can express their goals, values and priorities are invaluable. They help prevent misunderstandings and align family members around shared goals. Getting to know all parties and guiding discussions in a neutral, non-confrontational manner is key. The result is that advisers start to build relationships across generations, and all parties feel respected and understood.
Building relationships across generations
One of the biggest challenges is building relationships with the various beneficiaries, who may or may not be clients. It’s important to understand how different generations want to use their inheritance, and what they value.
Baby Boomers and Gen X value security and reliability. They also value personalised care and long-term relationships. Dependable, transparent communication encourages trust and builds strong emotional bonds with this cohort.7
Younger generations don’t tend to value financial advice. By framing planning in terms of autonomy, future goals, and empowerment, advisers can grow a connection over time. It also means connecting with this cohort on a different level. Engaging content and tech-driven communication helps shift their attitude towards financial guidance and caters to their preference for instant feedback.
Different generations need to be engaged differently. It’s not something that happens overnight and starting early is key. Understanding what each generation values and their communication preferences helps build credibility and trust over time.
Different generations also have different plans for an inheritance. 50% of older beneficiaries generally want to pay off their mortgage, whilst 60% of younger beneficiaries want to use an inheritance to invest. Getting all parties together for open discussions focused on goals and values helps bridge the gap. It can also reduce anxiety and increase engagement between parents who may want wealth invested, and younger generations who are focused on debt reduction and investing for the future.
There’s no doubt about it - intergenerational advice is a big topic and it’s here now. We’re here to partner with financial advisers to help you build trusted relationships with your clients to support the current and future generation of retirees retire well with confidence. Speak to one of our Business Development Managers to learn more.
References
- https://www.pc.gov.au/research/completed/wealth-transfers/wealth-transfers.pdf
- https://www.australianretirementtrust.com.au/learn/education-hub/adviser-trust
- Research conducted by Australian Retirement Trust, June/July 2024, Advisers n=400, Advised members n=1,272.
- https://www.abs.gov.au/statistics/labour/employment-and-unemployment/retirement-and-retirement-intentions-australia/latest-release
- Retirees, Financial Planning Horizon and Retirement Satisfaction: https://www.griffith.edu.au/__data/assets/pdf_file/0040/1674895/FPRJ-Vol.8-Iss.1-2022.pdf
- https://ensombl.com/articles/the-art-and-science-of-trust/
- https://executive.berkeley.edu/thought-leadership/blog/enhancing-intergenerational-communication