Advisers risk losing potential clients if they fail to put in place a clear intergenerational business strategy, according to research from HSBC Life.
The study, which surveyed 200 advisers, found almost all (96 per cent) said intergenerational planning is important for their businesses and over half (56 per cent) said it is highly important.
Despite this, just 62 per cent claim to have a clear intergenerational business strategy.
Just under a third (30 per cent) said they are working on one while another 6 per cent said they plan to implement a strategy, while 2 per cent have ruled it out.
Mark Lambert, head of onshore bond distribution at HSBC Life (UK), said: “Advisers may have worked their whole career to build up their client bank and their clients’ wealth but if they don’t put into place strategies to build a trusting relationship with inheritors there is a very real risk that this wealth will go elsewhere."
A key issue identified by the research was a lack of engagement with the children of adviser's main clients.
Just 30 per cent of advisers said they discussed issues with client’s children and 35 per cent said they have met them.
HSBC said advisers are more successful at engaging with clients’ partners.
Around six out of 10 (58 per cent) said they have met clients’ partners while more than half (54 per cent) said they have discussed financial planning with the partner.
Lambert said: “While many advisers do have a relationship with a client’s spouse it can be less common for them to also know their children.
“This makes it even more important to encourage financial conversations with clients, spouses, and beneficiaries. Encouraging ongoing conversations is the key to retaining future clients.”
The report identified the rise of direct-to-consumer platforms as a threat to advisers retaining the business of the beneficiaries of a client’s estate and also the “natural scepticism of younger generations surrounding the value of professional financial advice.”
It argued that intergenerational planning is a “win-win” for clients and advisers with clients able to maximise the tax-efficient accumulation of wealth while minimising the tax on funds withdrawn and on transferred wealth as a result.
Adviser businesses secure longevity and greater capital value by building strong relationships with multiple generations of clients.
The report outlined that advisers need to develop and deploy engagement skills in order to improve their intergenerational business with a particular focus on digital communication, advice and guidance.
sonia.rach@ft.com
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