Conversations needed on baby boomer inheritance
More financial advisers needed to engage in the tough conversations with their baby boomer clients around how their children would handle their inheritance, according to William Buck.
The national accounting and financial advisory firm's director, Fausto Pastro, said 80 per cent of the firm's baby boomer clients expressed concern that their children were not capable of handling their growing inheritance accumulated through superannuation funds, property, and businesses.
But advisers needed to find the language to ask baby boomers the delicate questions around the financial acumen of their children.
"It's a tough discussion and it's very difficult to find the words so you're not seen to be criticising the children. How do you enquire without seeming to be critical of it?" Pastro said.
"The first question to ask is if you passed away yesterday how would you like your estate managed?"
Advisers could then ask clients to rate the financial acumen of each of their children, which would be an honest assessment.
"That's not the adviser making the honest assessment. That's the parents making the honest assessment."
Baby boomers were also concerned wealth would dissipate once their children inherited it either through relationship breakdowns or financial hardship due to poor business decisions.
Pastro said he had seen a surge in requests from baby boomer clients to set up tax-effective testamentary trusts to help their children manage the wealth after they pass away.
"The legal framework which is set ensures all beneficiaries know exactly where they stand and are less inclined to dissipate the wealth," he said.
AUTHOR
Malavika Santhebennur
Recommended for you
ASIC has released the results of its first adviser exam to be held in 2025, with 241 candidates attempting the test.
Quarterly Wealth Data analysis has uncovered positive improvements in financial adviser numbers compared with losses in the prior corresponding period.
Holding portfolios that are too complex or personalised can be a detractor for acquirers of financial advice firms as they require too much effort to maintain post-acquisition.
As the financial advice profession continues to wait on further DBFO legislation, industry commentators have encouraged advisers to act now in driving practice efficiency.
