Investors Worry How Inherited Wealth Will Be Spent In UK - Survey

Robbie Lawther

25 October 2018

Nearly half (48 per cent) of those planning to leave an inheritance to the younger generation are concerned about how they will use the money, according to a new report. This comes at a time when older generations are preparing for the a wealth transfer. This report found that on average, those over 55 expect to be passing on an inheritance of over £257,000 ($335,000) to either their children or grandchildren.

published The Generation Game report, which looks at the intergenerational wealth transfer expected to take place in the UK over the next 30 years. There were several surveys in the report. One survey covered around 1,000 people aged between 25 and 45, who are expecting to receive an inheritance of at least £50,000 (in fixed assets or money) from their parents and/or grandparents. Another online survey looked at approximately 500 over-55s with investable assets of £100,000, who are leaving an inheritance to their children or grandchildren. Another online survey covered the responses of 200 IFAs. In addition, more than 100 face-to-face interviews with intermediaries, lawyers, accountants and family offices were conducted by Sanlam UK.

Alongside worrying how the younger generation will spend the inheritance, those over 55 are concerned about the lack of advice the recipients will receive. Nearly two thirds (61 per cent) fear that the younger generation are not getting adequate financial advice, with 59 per cent explicitly wanting the beneficiaries of their wealth to see a financial adviser about their inheritance.

A third (33 per cent) stated that they would like their beneficiaries to use a financial advisor already familiar with the family’s finances.

Even though nearly half of the over-55s surveyed are concerned about how the next generation is going to manage their inheritance, only one in ten (9 per cent) have spoken to their beneficiaries about seeing a financial advisor.

Over a third (35 per cent) of those who admit to not having yet spoken to their beneficiaries say that they find the subject too hard broach with their loved ones. Just one in five (18 per cent) think it is the job of the donor to bring up the subject.

“The matter of inheritance can be difficult and emotional for anyone to approach,” said Penny Lovell, chief executive of Sanlam UK’s private office. “It is not every day that we have to consider what happens to our money when we have passed away. However, it is too serious a subject to be ignored. Conversations about passing down wealth should be tackled early, so everyone in the family is clear how much will be left. This allows all parties to plan and, despite the sensitive nature of the subject, delivers great peace of mind. Financial advisors can help support this process. They will very often know members of the same family and will have an understanding of family finances. In many cases, financial advisors can provide an objective, third-party view as to how wealth should be passed down and managed. This is not only reassuring, but can ensure money is managed more successfully through the generations.”