Over the next 10 to 20 years it’s been estimated $3.5 trillion dollars of Australia’s Baby Boomer wealth will move from one generation to the next*.

Will this dramatic change be good for your business? Are your clients confident to pass the wealth on?

The answer to that depends largely on one thing. Relationships.

A global Deloitte Research study in 2015, indicated that 90% of beneficiaries or heirs are likely to move on from their parent’s adviser. But there’s good news in the data too. This figure could drop substantially to 28% if advisers could find a way to engage with the next generation**.

Deloitte’s not the only one looking into this issue. The Institute of Preparing Heirs reports that a significant 70% of family wealth transfers fail, not because of poor tax, wealth or estate planning, but because of a lack of communication and trust within the family***.

So how can we, as trusted advisers, build trust and strengthen communication, before it’s too late?

  • Engage Early

Building relationships take time. The earlier you can meet more of the family, the better. If you can learn about their interests and priorities, you can start to build trust. Think about encouraging clients to invite their children to meetings where you can share broad level information without divulging much around the actual dollar amounts. You can also raise family succession planning and philanthropy. These topics can encourage children and grandchildren who may not even be involved in business or family finance decisions yet, to be part of a shared discussion that’s just as important.

  • Share knowledge

A great way to build relationships with the whole family is by providing education through online resources. Think about sourcing seminars focused on general education or thought leadership pieces. Younger generations, particular Gen Y, often have a strong social consciousness, so topics around ethical or mission related investing or social impact are often valued.

  • Connect to values

Look beyond the numbers and start to understand the family values and what is really important to your clients. The Institute of Preparing Heirs (2014) defines wealth as including “resources and assets in all forms: cash, bonds, equity, ownership interests, real property… even your family name, knowledge, health, spirituality, family unity, and support of community”. Often the second part of this definition is just as valuable, if not more valuable to families, however it is often missed or not spoken about.

Ask more questions around the family, their concerns, what a legacy means; break down the above definition with your family clients. This can support clients to work through their priorities and where the gaps might be, engaging broader family members earlier. Remember to seek out specialists as needed to address these gaps and stay engaged in the process when it makes sense.

  • Engage in Philanthropy

The 2018 U.S. Trust insights on Wealth and Worth study revealed that 84% of high net worth families (investable wealth > $3millon) ranked “Giving Back” as an important family or personal goal. Charitable Foundations are very often created by a family, who want to create a meaningful legacy that lives on beyond their lifetime. It is a core part of their family purpose, legacy and overall wealth and helps provide purpose, especially if they have stepped back from their active business or career pursuits. It is also of genuine interest to younger generations and appeals to their strong sense of social consciousness.

As a specialist philanthropic adviser, I’ve seen how strong relationships can become when these four approaches are followed. It’s my job to work alongside a clients’ financial adviser, provide specialist expertise and help get the conversation flowing. Time and again when I’ve been invited into the discussion, I’ve seen an early interest in charitable giving become a tangible foundation that supports the broader family goals and creates an ongoing legacy, from one generation to the next.

At Elston, we continue to invest in supporting all generations within the family to engage in financial literacy, strong stewardship, giving back and creating meaningful legacies. If you would like to learn more about our specialist services in succession planning and philanthropy, please get in touch.

About Amanda

This article was written by Amanda Sartor, Manager of Elston Philanthropic Services. Amanda specialises in supporting successful individuals, families and business give back and get more. Amanda is passionate about giving back and is actively involved in several giving initiatives including Women & Change giving circle, 10×10 Philanthropy and works as an Associate Consultant to the peak body, Philanthropy Australia. Amanda is a Certified Financial Planner (CFP), holds a Graduate Certificate in Business (Philanthropy & NFP studies) at QUT and is completing her Masters in Philanthropy & Social Investment at Swinburne.

* McCrindle, 2016, Wealth Transfer Report, A Report for No More Practice, September
** Global Data, 2019, “2019: Trends to Watch in Global Wealth Management
*** Williams and Preisser, 2012 “Preparing Heirs”