Over 1 in 10 Aussies plan to pass down $1m and more

Adviser Ratings wealth transfer intergenerational wealth financial advice

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Australia’s looming intergenerational wealth transfer remains a crucial opportunity for financial advisers, with 14 per cent looking to transfer $1 million or more.

The upcoming $3.5 trillion wealth transfer has been widely discussed in the financial advice industry, with advisers being “in the box seat” to lead the charge.

Late last year, Australian Ethical found an overwhelming majority (77 per cent) of advisers who actively encouraged their clients to engage their children in the wealth transfer conversation saw an increase in client satisfaction and retention of half or more of their clients.

Recent findings from Adviser Ratings revealed the amount of funds which clients and consumers intend to transfer.

On the upper end of the scale, 14 per cent plan to transfer $1 million and above and 17 per cent signalled they plan to transfer $500,000 to $1 million.

“Those intending to transfer large sums of money currently are few, suggesting an opportunity for capture in that segment.”

The largest portion, 21 per cent, intend to transfer $200,000 to $500,000, while 16 per cent said $100,000 to $200,000, and 13 per cent plan for $50,000 to $100,000.

Nearly 20 per cent demonstrate a willingness to transfer $50,000 or below, “highlighting a potential disconnect between aspirations and actions”, Adviser Ratings stated.

The research firm also suggested that despite the heightened awareness of the need for wealth transfer planning, the vast majority of Australians remain unprepared.

A significant 82 per cent of consumers currently lack a concrete plan for passing on their funds. Breaking down this figure, 46 per cent said, “No, it doesn’t affect me”, while 19 per cent signalled, “No, my family will take care of it”. Some 17 per cent said they lack a plan but will build one soon.

In contrast, just 11 per cent said they will build a plan in five or more years, and 7 per cent said they will in the next one to five years.

“This underscores the importance of seeking professional advice in navigating the complexities of wealth transfer,” Adviser Ratings wrote.

To help bridge the gap between those lacking plans and the considerable funds set to be passed down, Adviser Ratings encouraged advisers to not only offer tailored solutions, but also educate clients on the value of comprehensive wealth transfer management.

“By emphasising tax minimisation strategies, preserving family wealth across generations, and facilitating equitable distribution, advisers can empower clients to navigate this complex process with confidence.”

Moreover, the firm emphasised addressing potential family conflicts and fostering open dialogue to ensure a seamless transfer of funds.

A recent whitepaper from Foresters Financial expected family disputes to be an “inevitable downside” to arise from the great wealth transfer.

“Conflicts and disputes will eventuate, even with a carefully drafted will and meticulous estate planning. With many families now blended due to divorce and subsequent remarriage (with resulting second families), there is every likelihood of an escalating number of disputes over inheritances,” the paper wrote. 

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