Communication more important than ever with 'seismic' wealth transfer

In a recent blog post, Mark Campbell, head of wealth at Isio Wealth Planning and Jonathan Brown, chartered financial planner at Isio Wealth Planning, discussed how the largest generation wealth transfer in history was underway and why it was more important than ever that everyone involved was aware of the needs and wishes of all affected parties. 

Campbell and Brown believed because of the “seismic” shift in the amount of wealth being transferred, it was critical that simple steps were taken in order for the process to be efficiently and satisfactorily managed for everyone involved and that communication was key in this process.

“This isn’t about a product or advice, it’s about being involved in the process. And the main barrier is that, as a society, we don’t have these conversations as often as we should do,” Campbell said.

According to Brown the first hurdle was getting the right people in the room because there can sometimes be nervousness from older clients to involve their children and vice versa.

“It’s understandable that these are emotive issues and each family dynamic is unique but the best long-term outcomes arise when communication has been inclusive from the beginning,” he added.

Brown also explained how these sensitivities can often result in wealth transfer planning being “relegated” down the to do list.

He said: “There are really simple actions people can take to improve the process. Properly structuring their will, for example, or exploring tenants in common legal structures on owned property. 

“But often there’s never that urgency or call to action until it’s too late. And that’s when potential benefits or savings are missed out on.”

When everyone comes together in an open and constructive environment, other issues can also be resolved, according to Campbell.

“There can be a notable gap in the perception of wealth between the generations. And that’s hardly surprising given the significantly different economic conditions and employment dynamics that have taken place in society. 

“Age groups spend money in different ways and the current squeeze on spending isn’t going away soon. These kinds of factors mean younger cohorts could find it difficult to match the workplace pension contributions their parents did,” he explained.

Brown pointed out that people were also living longer meaning the financial implications of end-of-life care were harder to anticipate, which could potentially be another difficult conversation to have as a group. 

“It introduces a new level of uncertainty which in turn can lead to further delays in decision-making.

“And that’s where expert independent wealth planning plays its part. Ultimately if someone needs guidance then they need to know who to talk to. The family then has a trusted and knowledgeable point of contact right now and going forward,” he explained.

Campbell believed trust was the element that was most important of all when it came to wealth transfer.

He said: “Yes these are crucial decisions but it’s the humans behind these decisions that matter. Families need support that draws upon experience and insight but also the highest ethical standards. The confidence of having someone in their corner through this process is invaluable.”

alina.khan@ft.com