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Table of contents
Passing on Wealth: New Research
The Legal and Political Landscape
Financial Planning
More to come…

On Tuesday, 8th October, 85 High Net Worth Individuals (HNWIs) attended our event, Passing on Wealth: Addressing the Practical & Emotional Challenges, at the London Stock Exchange.

Many in the audience had backgrounds in the legal, accounting and banking professions, and listened to a panel of three experts talk about intergenerational wealth transfer, covering:

  • The latest research from the third instalment in our series on financial wellbeing;
  • The current political and legal landscape, and;
  • Financial planning, including long-term cash forecasting

Associate Director Olly Cheng chaired the event, quizzing the experts, convening three live polls on the night and hosting an audience Q&A.

 

Passing on Wealth: New Research

When it comes to passing on wealth, it’s essential to be comfortable with the amount and timing of transfers to beneficiaries. But being comfortable talking to trusted confidantes is just as important, so we kicked off the evening by asking the audience who they prefer to speak to.

 

 

In line with our latest research, the majority of the audience reported that they’re most happy talking to either their partner/spouse (50%) or a professional adviser (40%) about intergenerational wealth transfer. Notably, only 6% of the audience declared they would be most happy speaking to their children.

Simon Maule, Director at Linstock Communications, explained how this poll aligns with our latest research. In our new report, Passing on Wealth: Motivations, Emotions and Challenges, we describe how the primary goal of passing on wealth is to give to children at the most impactful time. However, there is a significant ‘comfort gap’ for many HNWIs when it comes to talking to their children about intergenerational wealth transfer. The report includes recommendations to help HNWIs redress the importance/comfort imbalance and bring about better outcomes for benefactors and beneficiaries.

You can also read our report to learn more about how HNWIs want to feather-boost, rather than feather-bed their children, aiming to give their offspring the financial support they need to get ahead in life and at the right time, without spoiling them.

“Saunderson House’s research shows that HNWIs want to feather-boost their children – not feather-bed.”, Simon Maule, Linstock Communications

We’d love to hear your feedback, so please do read the report and get in touch.

Of course, intergenerational wealth transfer is affected by the wider legal and political environment, as well as personal preferences and motivations. There has been much noise about potential changes to tax rates and IHT in recent months,  which may impact financial planning and wealth transfers in varying ways; including the recent review of IHT by the Office of Tax Simplification and more speculatively, any changes that may result from a change in government. In this context, we asked HNWIs in the audience to consider their biggest barrier to passing on wealth.

While almost two in five (39%) people in the audience agreed that their biggest barrier to wealth transfer is their uncertainty about how much wealth they need, it’s striking that their second biggest (24%) worry is about their money being squandered or ending up with the wrong person. These fears were crystallised in the Q&A, with the expert panel fielding a number of questions on the value – and potency – of trusts and pre-nuptial agreements.

Patricia Milner, a partner in the private client and tax team at Withers LLP, provided insight on how the current political and economic climate may affect wealth generation and transfer. Potential changes to IHT, including its possible abolishment and replacement, were dissected and discussed, whilst the potential implications should we see a dramatic shift to more socially progressive policies were also explained.

“If IHT is abolished, there’s no guarantee it will be replaced with something as favourable as the current tax”, Patricia Milner, Withers

Amidst the volatility, we have published a new guide on IHT planning that provides practical guidance on the rules, reliefs and current recommendations from political parties. Click here to download your copy. 

Financial Planning

One of the fundamental concerns our clients have around wealth transfer is about knowing how much they should pass on, as was realised in the previous polls, with 39% of attendees not knowing how much they need for the rest of their lives. Of course, the answer depends on a variety of factors and is different for every individual. But we wanted to gauge how much HNWIs think they need to assure them of retirement at 60 years of age and a £150,000 p.a. gross income.

 

The audience recognised that they need a pot containing at least £3 million (38%), with the most popular answer of £5 million chosen by 41% of those HNWIs in attendance. In practice, the exact amount you would need will depend on factors like risk profile, and would fall anywhere within the £3-6m band. Reassuringly for many in the audience whose biggest concern is about knowing how much they need to pass on, Saunderson House’s Chartered Financial Planner Georgina Fry showed how it’s possible to determine how much wealth you can pass on, aligned with your financial goals, by how much you save and spend using cash flow modelling tools.

Our long-term cash planning tools have proven popular amongst our clients especially those facing uncertain times. Cash planning tools assist clients in understanding their income needs and allow clients to model the impact of drawing a regular income as well as contingency income from investments and pensions. And given the current tax arrangements around IHT, our current advice for most clients is to leave your pension pot until last.

“Treating your children equally doesn’t mean giving them the same amount at the same time.”, Georgina Fry, Saunderson House

Additionally, people in the audience also asked about the right time to pass on wealth and what constitutes as fair and equitable gifting to children. We know from conversations with our clients that these are two of the primary concerns around passing on wealth, so it was great to give HNWIs a platform to share their thoughts and questions on these matters.

More to come…

The three presentations and audience questions sparked lively conversations amongst the panellists, contributing to an engaging and informative evening. It’s clear, both from hearing from the audience and listening to our clients, that passing on wealth has become the ‘after dinner’ topic of conversation. Many HNWIs want to help their children with financial support at a time when it has the most positive impact, but the desire to help is balanced with the perennial concerns over the timing and the amount they should pass on.

This is where we come in. From our decades advising HNWIs, we are well placed to act as a sounding board and help you make informed financial decisions. But we also know that it can be helpful to know what other people like you are doing, which is why we are putting on these events to bring HNWIs together to share their experiences and insight.

We thank those who attended and shared their views at the event, and we are very much looking forward to hosting our next event at the London Stock Exchange on Wednesday 30th October.

About The Author

Olly Cheng
Olly started at Saunderson House in 2008, following the completion of an M.Phil in Social and Economic History from ...
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