3 min read 21 Jun 22
Encouraging generations of the same family to use your services can provide valuable continuity – both for your business and their financial planning.
An estimated £5.5trn is expected to pass between generations in the UK over the next 30 years. So it’s no surprise that 59% of financial advisers say that demand for wealth transfer advice has increased over the past three years, according to our latest Centralised Retirement Propositions Report with NextWealth.
Platforms play an essential role in supporting and co-ordinating intergenerational financial planning. Through our Family Linking facility, M&G Wealth Platform is making it more efficient and more rewarding for family members to be using the same platform (and, in turn, the same advisory firm) in a number of ways:
First and foremost, the M&G Wealth Family Group facility allows our Annual Platform Charge to be calculated on the total value of the portfolios of all of a family group then allocated proportionately to each member.
The Annual Platform Charge is tiered and reduces as certain thresholds are reached – starting at 0.3% for investments and cash up to £1 million and falling to just 0.06% for assets between £3m and £5m. So the greater the total assets held by a family group, the more everyone can benefit from these reducing rates – as the example below shows.
In particular, smaller account family members can by-pass the minimum charge of £15 a month, which makes a portfolio of less than £60,000 cost proportionately more.
|Benefits of Family Linking on M&G Wealth Platform|
|Scenario showing the potential Annual Platform Charge savings from Family Linking|
|Parent 1||Parent 2||Child 1||Child 2||Grandchild 1||Grandchild 2|
|Value of assets||£2,000,000||£900,000||£500,000||£500,000||£500,000||£300,000|
|Annual Platform Charge without family linking||£3,998.17 p.a.||£2,696.29 p.a.||£1,497.94 p.a.||£1,497.94 p.a.||£180**||£180**|
|Annual Platform Charge pa with family linking||£2,806.75 p.a.||£1,262.91 p.a.||£701.59 p.a.||£701.59 p.a.||£70.16 p.a.||£42.09 p.a.|
|Based on Annual Platform Charge of: Up to and including £1m – 0.30%; from £1m up to and including £3m – 0.10%; from £3m up to and including £5m – 0.06%. Terms available on request for assets over £5m **Charge is subject to a minimum of £15 per month|
Advisers can switch on family linking without seeking additional permissions from the client. Family groups can include spouses/civil partners, parents, grandparents, children and grandchildren (spouses of children and siblings don’t qualify, but of course can have their own family groups). New members can be added at any time.
The management information (MI) reports on the M&G Wealth Platform can show advisers all the family linkages in place in their client bank and allow them to spot opportunities for further linkages. MI data can also show where assets are nearing the threshold for the next lower tier of charging and be a basis for a discussion to encourage clients to bring other assets on platform.
As well as reducing costs, family linking can offer other benefits and allow advisers to demonstrate their value in other ways.
A family-wide view gives real opportunity to deliver holistic planning. Advisers (but not clients) get access to a single report on family groups showing all the products and wrappers in the group – enabling them to see where, say, there’s scope to maximise ISA, Junior ISA or SIPP allowances.
Advisers can create bridging or linking accounts to enable easy transfer of cash between family members to support gifting and inheritance tax planning. An IHT Modeller is also now available on platform, allowing advisers to show clients the potential IHT liabilities when establishing a discretionary Gift Trust, Discounted Gift Trust or Loan Trust. Login to take a look.
As platform technology enables advisers to view and coordinate the financial planning of multiple family members more easily, intergenerational planning is no longer the preserve of high net worth family offices. In fact, our latest Family Wealth Unlocked report, published this April, shows that one in three advised families now share the same adviser.
By inviting different family members to share in economies of scale on charges and enable holistic, coordinated planning, firms can offer a really compelling advice proposition – and put each family’s wealth-planning on a more robust footing for generations to come.
If you want to find out more about our family linking facility please use this form to let us know what you want to hear about and we’ll get back to you at a time to suit you.
The information contained in this page is for professional Financial Adviser use only. If you are a private investor, please visit the Private Investor section or contact your Financial Adviser for more information.