Each generation’s inheritance spending goals – what advisers need to know
In December 2019, retirement specialist, Just Group plc posed the following question to over 4,000 UK adults: What did you / will you use your inheritance for?
Here are the results1:
(Opinium Research conducted a survey amongst 4,000 UK adults between 17 and 24 January 2019. Results have been weighted to reflect a nationally representative audience)
What these results showcase is, aside from saving and investing goals, inheriting a considerable cash windfall allows different age groups to achieve their property dreams.
Firstly, just under a third of Millennials surveyed planned to use any inheritance they receive to get on the property ladder.
Research also shows that tuition fees featured in the list of uses for inheritance money. Around one in seven (13%) 18 – 34-year olds opted to pay off their school or university fees.
Advisers with clients in this age bracket need to be aware of the growing importance of an inheritance. This is especially vital in helping a millennial climb onto the property ladder.
For those aged between 35 and 54, the priority was paying off a mortgage. Around 32% intended to use any money received to clear their property debt.
For advisers with clients who are in this age-range and are also homeowners, exploring the client’s other financial considerations, such as whether they have any family dependents or other outstanding debts, is a necessary first step when they inherit large sums of money.
22% of over 55’s planning to use inheritance to carry out home renovations. In addition, one in seven (15%) said they would focus on paying off their mortgage.
Advisers with clients over 55 will need to be aware that this is the generation most likely to receive the heaviest cash windfall. This puts the client at greater risk of IHT liability. In turn, the pressure of ensuring the wealth is passed on through the younger generations intensifies.
The challenge for advisers
According to additional research from OneFamily, the Average inheritance left by relatives is £11,0002.
Although many younger relatives are benefiting from receiving a financial legacy earlier, the dilemma that most people will face is deciding between either their short or long-term needs when deciding how to put the money to good use.
Therefore, financial advisers should help their clients in exploring what they want to achieve in their life. Building a financial plan in order to best meet these goals is a good first step. This can then lead to client retention and a greater chance of inter-family referrals.
How we can help
At Stellar, our vision is to be the leading provider of inter-generational financial services. That’s why we’ve created a free adviser toolkit with research specifically for advisers and their clients.
Our toolkit includes helpful one-page overviews of the different generations and how this can help the adviser understand the inheritance economy that is already underway.
For more information on how we can help you to effectively plan for your clients. contact us now at firstname.lastname@example.org or on 020 3907 6985.