While financial advice gives clients value all year round, there are specific events in life that bring intergenerational needs more specifically into focus, often taking your client's existing plan in new directions. Below you’ll find some of the most topical.
This life-changing event is often the catalyst for new intergenerational conversations, ranging from trusts and gifting, to ISAs, to planning for private school and university fees.
Windfalls are rarely expected - or planned for - but have the potential to open new doors for current and future generations. New needs that follow typically include lump sum investing, gifting and estate planning, to reduce potential IHT liabilities.
The separation of families – and finances - is increasingly common, bringing with it new financial needs, including: pension sharing (and potentially ‘rebuilding’), wills and CGT and IHT replanning.
Key to adviser understanding of cross-generational needs is the May 2019 FCA paper ‘Intergenerational Needs’, which analyses the needs of three distinct generations: Baby Boomers, Generation X and Millennials. Below we’ve summarised each’s distinct characteristics and the resulting needs and financial advice opportunities.
Typically homeowners, benefiting from price growth over time. They have often accumulated pension wealth, either through a DB scheme or a variety of pension pots. Unlikely to have made provision for social care yet, their priority being to support younger generations. Traditionally have had little experience of professional financial or tax planning.
Typically property owners married with two children. Parents ageing. They have accumulated less wealth than their Baby Boomer parents had at the same age. May still have a mortgage to pay and other debts, so struggle to save into pensions or savings. They’re aware their pension pots will not be sufficient to retire comfortably. Finances are likely to be stretched today, but will often inherit from their parents in late 50s.
More likely to be university educated than Baby Boomers, Millennials are often skilled, self-employed and likely to earn above average income. They are, however, burdened by high living costs and student debt. Ambitious and keen to get on the housing ladder, they are more motivated by short to medium-term needs over distant retirement. Likely to inherit property wealth.
Source. FCA paper: intergenerational differences: May 2019. Sections 8.20-8.22, 8.30-8.33 & 8.40-8.43 https://www.fca.org.uk/publication/discussion/dp19-02.pdf
It’s essential that clients fully understand the impact increased wealth and potential IHT could have on their estate. We've a range of tools and calculators which are designed to help you demonstrate this clearly to your clients.
Explore planning scenarios across your client’s full retirement journey with Prudential’s Retirement Account.
Calculate potential Inheritance Tax liabilities when establishing a discretionary Gift Trust, discretionary Discounted Gift Trust or discretionary Loan Trust.
Discover the investment needed in an offshore bond to fund school or university fees and the tax payable on withdrawals.
We've a range of support on Intergenerational Planning, written by our technical experts, ensuring you stay up-to-date
For any help or support for your client’s needs, please don’t hesitate to contact one of our expert Account Managers.