Real estate reigns supreme among wealth inheritors
Next-generation Australians are increasingly leaning towards financial advice as they plan ahead for when they receive an inheritance, according to Fidelity.
Surveying over 1,000 Australians, including over 600 respondents under the age of 45 described as next-gen investors, Fidelity found two in three next-gens would be at least somewhat likely to seek financial advice or planning for it upon inheriting a large sum of money.
Close to one in five next-gens have already received some form of inheritance, and one in 10 expect to receive even more.
A further two in five believe it is likely that they will receive an inheritance in the future.
“Gen Z are much more likely to have already received an inheritance or major financial support compared with Gen Y and much more so than Gen X,” the report observed.
Notably, for those who have already received an inheritance or are likely to receive one, almost half believe it to be $200,000 or more.
The figure stands in line with similar research, with Adviser Ratings previously finding the largest portion of clients (21 per cent) intend to transfer $200,000 to $500,000.
Some 16 per cent plan to transfer $100,000 to $200,000, and 13 per cent plan for $50,000 to $100,000.
According to Fidelity’s report, the most common use for an inheritance remains investing it, with 48 per cent of Gen Z (18–28 years) and 35 per cent of Gen Y (29–43 years) opting to allocate the funds towards investments.
In particular, real estate emerged as the most common preference. Some 54 per cent of Gen Z and 48 per cent of Gen Y said they hope to invest in the asset class.
However, they diverged on other assets, with Gen Z opting for Australian shares (42 per cent) and super (37 per cent), while Gen Y voiced an appetite for high-interest savings accounts (44 per cent) and then Australian shares (40 per cent).
The report observed that inheritance concerns and challenges are common among next-gen investors.
“The vast majority of next-gens hold at least some concerns about dealing with their inheritance,” it said.
“The main concerns of receiving an inheritance include tax implications, managing the money responsibly, family disputes and emotional stress.
“An emerging theme is ethical concerns, which is a worry for one in five Gen Z compared to one in 10 Gen Y and only one in 20 Gen X.”
Money Management previously explored how advisers are utilising several strategies to address client concerns with regards to an impending intergenerational wealth transfer.
Around 41 per cent of advisers are developing comprehensive estate plans and 37 per cent are advising on tax-efficient gifting strategies, according to Adviser Ratings.
An additional 35 per cent are focused on providing family governance and wealth education, and 22 per cent of advisers are setting up and managing trusts to facilitate smooth wealth transfer.
AUTHOR
Rhea Nath
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