The potential issue with intergenerational advice

One adviser may not be the best option for two generations, particularly if the parents are wholesale investors and the children are retail clients.

Financial adviser and partner at Koda Capital, Will Douglas, worked exclusively with wholesale certificated clients. He had a team of five people managing 40 clients, the majority of which were high net worth (HNW) individuals and families, but said he rarely carried out work for retail investors.

“I regularly get asked to do retail work, but I don’t do it. I have developed a process where there are a few people I trust who do that work and I refer clients to them,” Douglas said.

“Sometimes you will get asked by HNW wholesale clients if you can look after their children. Which is a great conversation to have, but if you don’t do retail, you may find yourself in a position where you can’t look after people’s kids and offer that intergenerational piece,” he said.

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That intergenerational piece was one of the major unmet advice needs of Australia’s HNW clients, according to research by Investment Trends for platform provider Praemium.

The research found that inheritance and estate planning and tax are the most-common need areas (cited by 34% and 32%, respectively) among a broad spectrum of HNWs with investable assets of $1 million to $70 million.

Close to a half (45%) of advised HNW investors already shared their adviser with other family members. When they used an accountant or a private wealth adviser, they were more likely to be a sole client (47% and 53% who used each were sole clients, respectively).

“Those advisory firms that have already built a multi-family offering have a distinct advantage over their peers as the more family members using an adviser the more willing HNWs are to pay for advice,” the report noted.

“This provides advisers with the opportunity to build deeper relationships across a family through intergenerational advice for both the benefactor and the beneficiaries as well as ongoing education around wealth preservation for all parties.”

However, not all advisers who focused on HNW clients provided retail advice.

Douglas believed retail advice was far more prescriptive than wholesale advice and was its own specialty.

“If you are not living and breathing retail every day, you won’t capture all the nuances. You could go through a process where you think you are ticking all of the boxes but because you’re not living and breathing that space you might miss something,” he said.

“It’s a bit of an unfortunate byproduct of the regulatory environment. We can offer retail at Koda, but it is really limited to a few advisers in the network. Retail needs to be done well. It is not just a box-ticking exercise.”