By 2050, it is projected that $3.5 trillion in assets will be passed down in what is being called the ‘silver tsunami’.
Navigating the differences between generations, varying family dynamics, and addressing concerns about wealth preservation is a delicate balancing act.
The Critical Role of Trust
Wealth management is a deeply personal and emotional decision. Before discussing wealth transfer, clients must feel confident that their family’s best interests are being prioritised.
This ‘trust’ element becomes even more crucial when advising multiple generations. At Future Gen, we already serve several family members of various extended families. For this to occur, we need to be trusted by the entire family. Additionally, we must be pragmatic, flexible, and accommodating, while having the adaptability to work with other Tax and Legal Advisers to achieve the best interests of the Family Group.
Is Retirement the Primary Focus?
With 710,000 Australians set to retire in the next five years, many Australians are focused on planning for retirement.
While retirement planning may be a major consideration, many people accumulate more assets than they can conceivably consume. So, while we understand that having an ‘asset consumption plan’ is a key component of a satisfying retirement, we also understand that there needs to be an ‘intergenerational wealth transfer’ plan. This is often the ‘elephant’ in the room, is often difficult to speak about and all too often ends up in the ‘too hard’ box.
Hesitation to discuss Wealth Transfer with their beneficiaries
Some of our clients are reluctant to discuss wealth transfers with their beneficiaries. Fears about family dynamics, being taken advantage of, or the impact of wealth on relationships are common. The key to overcoming this is to offer facilitated, open family conversations.
We facilitate this through a discussion about family values and what’s important to the whole family going forward, while asking how legacy assets could achieve this. The discussion becomes less about the individual and more about the achievement of family values.
How do we manage Intergenerational Advice?
Intergenerational advice is complex. Let’s not kid ourselves by saying its easy, when it is plainly not. There are various strategies involving tax minimisation, gifting strategies, utilising trusts, and determining the best time to distribute wealth. There are also diverse family dynamics to navigate, each with its own unique characteristics. We seek to guide this by conducting family meetings where everyone can express their goals and what’s important to them. This assists in preventing misunderstandings while aligning family members.
Our role is to remain neutral and guide these conversations with respect, and as a result, all family members feel valued and understood.
Each generation has different values and priorities; engaging them correctly requires time and understanding. Facilitating open discussions around these differences, focusing on shared goals and values, can help bridge the gap between older and younger generations.
Starting early and understanding their preferences helps build credibility and trust over time.