Jacqueline Berry of My Care Consultant explains why the great wealth transfer is really about relationships, not just assets. She highlights how supporting women through ageing-parent care decisions can transform adviser trust and retention. Firms that embed care into their advice model gain a lasting commercial edge.
Today’s wealth is held disproportionately by older generations, driven by shifting demographics and substantial asset appreciation, including vast property wealth. As a result, it has been estimated £7tn will pass from the silent and baby boomer generation to subsequent generations in the UK over the next 30 years.
Whilst much has been said about this intergenerational wealth transfer and the IHT tax planning opportunities that arise, the reality is that for a majority the initial path of an inheritance is commonly intragenerational, often from a male to a female partner.
How big an issue is this? Well, Hargreaves Lansdown have estimated that women owned 60% of the UK’s wealth by 2025, based on data from their direct-to-investor investment platform. It’s a trend that’s likely to continue over the next decade or so, and the crux of the matter is that research suggests a high propensity for women to move away from a financial adviser after the death of their male partner. Usually, this is because the adviser has not built a meaningful relationship with the female partner or is unable to adequately demonstrate they understand the woman’s perspective, goals and preferred ways to engage. So how should advice firms respond strategically?
As the great wealth transfer gets underway, advisers that find a way to engage with their female clients as well as the next generation in the right way and at the right time will most likely enjoy a considerable commercial advantage. But this isn’t simply about utilising property wealth to fund costs in later life, retaining assets under management or managing subsequent intergenerational wealth transfer between generations. It’s as much about recognising that female representation is growing and alongside that the importance of female clients, with female founded start-ups like MCC on the rise as well as more women sitting in company boardrooms – for example, its estimated that 40% of FTSE 350 board members are female, compared to just 9.5% in 2011.
So how can a focus on care help to retain female clients? There are of course many ways to retain and develop female clients, but, at MCC we have seen over many years how helping clients in respect of their ageing parents practical and financial related care needs can transform relationships between adviser and client. Put simply, helping clients retain/grow assets, secure and manage income or save tax (some of the core objectives of most financial advice firms) is almost always going to be welcome, BUT helping clients navigate the care systems on behalf of their ageing parents can be transformational in terms of the relationship they have with their adviser. This is due to the value placed on those who help and the sheer relief that often stems from knowing that their financial adviser can help (in house or via referral) at a time when most people have no idea who to turn to.
Whilst caring for an ageing parent isn’t of course the exclusive domain of female offspring, our experience at MCC is that the vast majority who take the lead when helping their ageing parents with their care needs are females, typically a daughter or other relative who either acts formally as attorney or informally on behalf of siblings/wider family members. The age of these unpaid (female) carer/s is typically in the sweet spot of most advice firm’s client age demographic.
For most ageing parents, their care needs typically escalate over time so at some point their unpaid family carer will need to engage with the care system in respect of three key needs: finding care, understanding eligibility for funding and understanding paying for care options. How to best meet these needs is unfamiliar to most people and together they present a significant opportunity to advice firms by making sure they have a care proposition, either in house or outsourced to help meet these usually urgent needs and in doing so avoid predictable harm that can often arise.
When it comes to building a proposition, the main thing a firm needs to decide is whether they have the expertise and systems to deliver both unregulated care advice accurately and profitably, as well as regulated paying for care advice. In respect of the former, if a firm feels they do not have the ability to deliver such advice in house, are unable to do so profitably or simply don’t want to do so, then outsourcing options should be considered.
This is why MCC launched My Care Hub, a unique one-stop shop designed to enable clients of advice firms to self-navigate the care needs of their ageing relative in their own time and at minimal cost.
You can find out all about My Care Hub and how to make this service available to your clients via:
https://mycareconsultant.co.uk/care-hub/
The views expressed in contributed articles are those of the authors and do not necessarily reflect the views of the Council.
