Over half of inheritors lack ongoing adviser relationship
Despite younger generations representing the largest group of potential inheritors, less than half of beneficiaries have professional advice to navigate this transition.
CoreData’s latest findings from its Investor Sentiment Index found that Australians aged 18–29 years old are the most likely to receive an inheritance at 58 per cent.
This was followed by 40–49 year olds at 47 per cent, 30–39 year olds at 44 per cent, 50–59 year olds at 42 per cent, and those aged 60 and above at 33 per cent.
However, the research highlighted the significant opportunity for guidance from the financial advice profession, with more than half of inheritors not having an ongoing advice relationship to manage this incoming wealth.
“There is significant opportunity for advisers to connect with a younger cohort of inheritors. It’s a win-win situation: those who can support a smooth and meaningful wealth transition will not only build strong client relationships but also help shape lasting financial legacies,” CoreData stated.
Andrew Inwood, founder and principal of CoreData, said this is particularly critical as advisers who have an established relationship with inheritors retain over 60 per cent of the funds invested with them.
“Despite the demand curve steepening, Australia advisers seem to be making little headway with the next generation, ignoring the fact our research shows that advisers who have a strong relationship with inheritors fundamentally improve the experience of the transition and tend to keep 66 per cent of the funds invested with them. Building the future value of your business has never been less complicated,” he remarked.
Across all wealth segments, 34 per cent of those surveyed expect an inheritance will make a significant impact on their life, underscoring the need for professional guidance as financial legacies are passed down.
This figure rose to 38 per cent for the high-net-worth segment, while 31 per cent of the core affluent and the mass affluent expect an inheritance to make a significant impact.
Ervin Sim, head of research at CoreData, also commented: “Our research shows that good financial advice helps to steer and direct these flows to the right places, ensuring that those who receive a ‘significant inheritance’ come out better – not just in the short term as measured by the number of cars, jewelry, boats and bags bought but rather having lifelong impact. From an adviser perspective, this also drives the opportunity for multigenerational advice relationships.”
The findings coincide with recent research from Fidelity International surveying over 1,000 Australian consumers aged 18–59 years old.
It uncovered that close to one in five of those surveyed have already received some form of inheritance, and one in 10 expect to receive even more. An additional two in five believe it is likely that they will receive an inheritance in the future.
When asked about the main concerns of receiving an inheritance, respondents cited tax implications, managing the money responsibly, family disputes and emotional stress as their top concerns.
“Much of the commentary has been focused on the positives of an inheritance and how this could help younger Australians with issues such as housing affordability. However, it is clear that there are also some concerns,” said Fidelity International’s Australian head of wholesale sales, Lauren Jackson.
“The vast majority of next gens say they are worried about managing their inheritance. Over half of next gens say they are likely to change their investment strategy after receiving an inheritance, and two-thirds would consider seeking financial advice or planning to help with this. There is no doubt that getting professional financial advice could be very useful for these people to help manage the tax implications, legal issues, and investment decisions.”
Fidelity’s research also revealed that lower fees and trustworthiness are the top factors enticing unadvised Australians to seek a financial adviser.
AUTHOR
Jasmine Siljic
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