Advisers have to be on ‘front foot’ in transfer of wealth

By 2035, upwards of $220 billion a year is expected to be passed down by the baby boomer generation, with a total of $3.5 trillion set to cascade down Australian family trees.

“There is going to be an unprecedented transfer of wealth from one generation to another,” said 24kWealth financial adviser Stuart Woodbridge.

In addition to the country’s increasing average life expectancy, wherein older generations are holding onto their assets for longer, he explained that the combined wealth of the baby boomer generation has been born and bred in favourable conditions.

Mr Woodbridge asserted that there is a significant opportunity for advisers in what many are terming an imminent “massive shift in wealth”.

“This means that we must be thinking about this shift now and how we work with families,” he said.

“All too often, many benefactors haven’t fully thought about, or made thorough plans, for even the most basic generational wealth transfer.”

Namely, 76 per cent of Australians don’t have a will in place, and 53 per cent of ageing parents have not discussed their will or legacy with their children, according to a Perpetual study surveying 3,000 Australians on attitudes towards wealth, inheritance and their families.

Moreover, the funds the inheritors receive won’t be “dripped out to them”, Mr Woodbridge said. He offered an anecdote that he believed other advisers have frequently encountered: “Dad left me some money, and so we went on holiday, bought a new car and gave some money to the kids.”

This transfer of wealth will present “new opportunities” in the accounting, legal and financial planning spaces, he continued, but only as long as advisers are “on the front foot” to receive them.

“In addition, as clients age and approach the end of life, the number of so-called ‘vulnerable clients’ will increase, bringing with them a whole host of new needs and challenges such as powers of attorney, aged care and end-of-life directives.”

This, the adviser said, “is not something that benefactors will think about until the last minute or when they come to that bridge.”

“Engaging with inheritors and working with the whole family unit will ensure that the transfer of wealth is smooth and seamless,” Mr Woodbridge concluded.