Money and death are not, generally, people's preferred topics of conversation - especially not when one's own family is involved.
But as difficult and distressing as these may be, advisers warn that such conversations need to be had, because the generations need to sit together and discuss attitudes and intentions around wealth and inheritance.
According to the Kings Court Trust, a wealth transfer worth £5.5tn is set to take place over the next 30 years. With such a seismic wealth transfer already starting to happen, how can this touchy subject be broached to ensure good outcomes for all parties involved?
And when it is addressed, how can advisers and their clients marry what may be some wide differences in opinions and financial outlook among the generations?
Jessica Franks, head of investment products at Octopus Investments, says the first step is to ascertain what the various generations may believe and feel about their money.
She explains older people often feel they have been careful in accumulating their wealth, so they can often feel reluctant to pass it down if they fear they may see it being spent in a way they wouldn’t agree with.
According to Franks: “This is typically characterised by [a view money is] being frittered away on luxuries instead of invested for the future."
This view is shared by financial advisers, Franks says. "We surveyed 200 UK advisers in June this year, and the main reason they cited behind not retaining the assets of a deceased client’s beneficiaries is that they believe beneficiaries would want to spend their inheritance (68 per cent)."
But this belief may be a myth that advisers will need to bust if meaningful conversations are to get started in earnest.
Franks adds: "Our research also included the views of 1000 UK adults with investments partly or fully managed by an adviser, and when the 18-34 age group were asked about their future plans, 72 per cent said that if they were to receive an inheritance, they would be likely to invest the money."
In addition to being open to saving, generation Z appear to be open to conversations about money. Standard Life's survey earlier this year found:
- Loud budgeting is gaining popularity as the majority of gen Z feel comfortable discussing finances with friends (61 per cent) and family (71 per cent)
- Seven in 10 (68 per cent) gen Z adults have turned down social activities due to their financial situation
- Some 49 per cent of gen Z are cutting back on discretionary spending order to save for a financial goal.
Franks highlights that advisers can play a role in helping to ensure that younger beneficiaries have good financial knowledge and access to financial advice.
She also emphasises the importance for these conversations to take place early, ensuring any assumptions are broken down to avoid causing friction or acrimony before the wealth transfer process starts.
Differing attitudes towards spending
If some members of the older generations can be reluctant to passing on wealth, believing that the youth will "fritter" wealth away, other members have not seemingly considered the importance of passing on wealth - or are reluctant to discuss inheritance.
