Industry Voice: How at risk is your advice business from intergenerational wealth transfers?

The industry has successfully guided baby boomers to retirement. But their children think and act very differently. Without an intergenerational strategy there could be a rapid decline in clients and AUM.

clock • 3 min read

It is quite simple - those advice businesses who wish to remain valued need to have an intergenerational wealth business strategy.

Without one, the death of clients could kill their business. But this strategy should not simply be about long-term wealth management to protect the current value of clients. It is also a growth strategy.

Intergenerational wealth transfer is an opportunity to develop new relationships with clients or extend existing relationship within families who entrust you to manage additional wealth on their behalf.

But before identifying the opportunities, advisers must first diagnose the risks.

Advice businesses face three key risks

Advisers have put in much work over the years to build up a business based on the value they've helped to add to their client - but this is increasingly under threat. Without a trusted relationship with the next generation, they will take the inherited wealth elsewhere. Most advisers already have a good relationship with their clients, and that could also extend to their spouses. But if they don't have a relationship with their children or grandchildren, all that hard work could be undone very quickly with little to no value remaining after they have died. Don't let your client's beneficiaries walk off and make a mistake.

Advisers usually can expect to encounter one or more of the following three risks:

  • Concentration risk: This happens when a disproportionately high amount of the wealth is managed, and fees earned, with a select few key clients.  Therefore, the death of one or more of these clients could expose an adviser's business to significant costs without an intergenerational wealth strategy in place.
  • Mortality risk: This happens when an adviser's key clients are all in the later stages of their lives. The likelihood of death increases the urgency for these firms to put an intergenerational wealth strategy in place if one does not already exist.
  • Retention risk: This happens when an adviser only has a relationship with their key client, rather than their wider family (e.g. spouse or children). A lack of relationships with those family members does expose the business to significant costs to acquire new customers - an intergenerational wealth strategy should focus on building these relationships.

How to identify your business's risks

Every advice firm has it own unique opportunities and challenges, and yours will be no different.

So, here at Quilter we have developed a simple 10-minute self-diagnostic exercise which can help highlight to you what intergenerational risks your business faces.


On a piece of paper write down the following headings:

  • Client name
  • Value of wealth under management
  • Annual fee income
  • Age
  • Spouse/Partner
  • Parents
  • Children
  • Grandchildren

Complete the table rows with your top 10 clients based on the size of their wealth and the level of fees that they pay. Add values in the columns to create totals.

For the four types of family member, indicate with a tick or a cross whether you have a business relationship with them.

The information in front of you should help you identify which of the three key risks listed above that your business might be facing (concentration, mortality and retention risk).


Download our helpful template to help complete the exercise here.


The Quilter solution

Quilter is the new name for Old Mutual Wealth.

Since 1979, we've been supporting financial advice professionals like you.

This year we have invested significantly into our platform upgrade, to help you build more valuable relationships - moving forward together. A key part of the improvements has been to make it easier for advisers to incorporate true intergenerational planning with a full range of age specific ISAs and other products and better value for clients with family linking of accounts.


Click here to find out more about our new platform and ongoing commitment to advisers just like you.


View Quilter's legals here 

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