Why financial advice is crucial during the Great Wealth Transfer

The UK is currently undergoing a huge transfer of wealth between generations and partners (especially women) that is expected to continue over the next few decades, known as the ‘Great Wealth Transfer.’ 

According to the Kings Court Trust, around £5.5 trillion is forecast to be passed between generations in the next 30 years. 

Some people are expected to benefit more than others, with women forecast to own 60% of UK wealth by the end of 2025, according to the Centre for Economics and Business Research. 

We’ll explore why financial advice can be beneficial for those who intend to pass on assets to their beneficiaries. 

Why is financial advice important during the Great Wealth Transfer? 

While increasing the number of people who can benefit from assets is positive, many may not understand the best way to manage their new assets and may not have sought advice before coming into their newfound wealth. 

Financial advice can be helpful for both long and short-term goals, as it’s tailored to your unique circumstances. 

A qualified financial adviser can provide advice on: 

• Retirement planning 

• Estate planning 

• Investments 

• Optimising and consolidating pensions 

• Equity release 

• Buying a property 

• Selecting the right insurance policies 

• Reducing your tax liabilities 

• Accountancy services for your business 

While financial advice does incur fees, it should ultimately prove beneficial and offer more value than the initial cost. 

Here are some of the reasons financial advice is important during the Great Wealth Transfer. 

Estate planning is complex 

While passing on assets may initially appear simple if you have an up-to-date will, it is a complex process, and many may forget that pensions aren’t usually covered by their will.  

When it comes to inheritance tax (IHT), your beneficiaries may be liable for a tax rate of 40% if your assets exceed £325,000. However, you may have a higher threshold if you’re married or passing on assets to a direct descendant, which could reduce or eliminate the IHT liability.  

There are also significant changes on the horizon, as inherited pensions will be brought into IHT from April 2027.  

These changes may require you to reconsider your estate planning or how you access and manage your pension during retirement. 

Therefore, obtaining expert financial advice can be useful in navigating these changes. 

Financial advice can help you reduce your tax liabilities 

There are many ways that a financial adviser can help you reduce your tax bill, whether it’s your personal or business tax liabilities.  

For example, a qualified financial adviser could recommend ways to cut your tax bill by using unused allowances, such as your capital gains tax allowance. 

Additionally, they could suggest ways to reduce your inheritance tax bill by using gifting allowances or writing a life insurance policy in trust.  

However, there are numerous benefits and drawbacks to consider, which is why expert advice is crucial. 

You can ensure your beneficiaries get the advice they need 

If you’re planning to pass assets to loved ones, it’s a good idea to include them in any meetings with a financial adviser.  

This can be helpful as it allows you to outline your estate planning and inform your beneficiaries of what to expect. If there are any conditions to your beneficiaries receiving any assets (such as those in a trust), this could also be a good opportunity to let them know. 

According to research by Unbiased, women are more likely to cite inheritance as part of their assets.  

A survey of nearly 1,300 UK consumers who used Unbiased to seek financial advice revealed that 19% of female financial advice seekers cite inheritance as part of their assets, which is 45% more than men. 

The research also found that 57% of male advice seekers plan to leave assets to a female partner, compared to 28% of female advice seekers who plan to leave assets to a male partner. 

Having a coordinated plan can also avoid any unwanted family disputes after you pass away, which can be costly. You can also help to preserve your wealth as it passes between generations. 

According to previous research, 70% of families will lose their wealth by the second generation, and 90% will lose it by the third generation. 

Communicating with family members is vital to help stop this from happening, especially as people tend not to stick with a family adviser or may choose to use a different one later in life.  

This may be due to a lack of engagement with the adviser or a preference for using different tools, such as more digital ones.  

Get expert financial advice 

Whether you’re hoping to sort out your estate planning, start your investing journey, buy a property or create a retirement plan, Unbiased can help. 

Unbiased can quickly match you with a qualified financial adviser regulated by the Financial Conduct Authority.