Every day around the country advisers sit down with their clients to find out what matters most to them.
While each conversation will be unique, some topics are likely to crop up time and time again. I think it’s safe to say that looking after their family will be the number one priority for many people.
Having the money to do so plays a part in that. But several of us still find it difficult to openly discuss our financial situation with our loved ones.
Clients should and do feel at ease with their adviser and so often you’re in a privileged position of knowing how someone thinks about money and what they want to achieve with theirs.
You help them shape their financial future, manage their expectations and ensure they know the risks and rewards of investing.
But are their family members on the same page? Could they also benefit from financial advice? Has your client sat down with their nearest and dearest and had the money talk? Or are they still waiting to find the right time?
Generation game
Advisers are crucial in facilitating difficult discussions about inheritance tax (IHT) and estate planning.
Perhaps conversations would feel less awkward if all parties knew each other’s goals.
Setting goals is an important part of financial planning. One of the methods advisers use to get people to talk about theirs is to find out what they deem to be important about money and why.
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The framing of questions can influence the mindset of clients and promote better outcomes, Morningstar Wealth research has found.
For example, questioning what is important to people about money tends to result in answers about the future, whereas asking about why money is important often has people thinking about the here and now.
Of course, not every client will want to be so open about their finances. Those approaching or in retirement may have concerns about whether they have enough for the rest of their lives.
Younger family members could feel uncomfortable asking for financial support if they need it. Those with more money might want to help now while they can see their family benefit but don’t know how to broach the topic.
All generations will have things they are happy to divulge or determined to guard. There’s a lot to consider for building and preserving wealth and then passing it down.
Advisers do a fantastic job of ensuring clients make their money work for them and this could create a real opportunity for intergenerational financial planning.
In Morningstar Wealth’s recent tax webinar, guest speaker Tony Wickenden suggested there is greater interest in this area, but progress has been slow due to a lack of clear communication.
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This is where you can step in and gauge how your clients feel about including more of their family in discussions and helping with difficult conversations both up and down the generations.
Many of you will be doing this successfully already. You may have even shared ideas with your peers. For others, it could be an area to explore in more depth.
A tax-efficient accumulation period can lead to more money and assets being passed on, while tax wrappers such as pensions and ISAs provide additional shelter from harsher taxes in future.
Helping clients to maximise the longevity of wealth and minimise tax leakage is something you do without hesitation.
But if relatives haven’t been involved from an earlier point, those assets could well end up elsewhere when the next generation inherit.
And at a time when the regulator is paying close attention to the value provided to consumers this could be an opportunity you can’t afford to miss.
Understanding the financial needs and aspirations of your main clients is one thing but knowing what’s important to their wider network could mean a greater retention of funds and add long-term value to your own firm.
A lot of it boils down to what advisers do day in day out – effective communication, behavioural coaching and keeping someone on the right path throughout the inevitable ups and downs of investing.
So, if family is what matters most to your clients, now could be the time to revisit your approach to intergenerational financial planning. It’s good to talk and clients will feel more confident to do so knowing they have you in their corner.
Ben Lester is head of distribution at Morningstar Wealth
