Estate Planning, financial advice, Financial Planning

Need for wealth transfer help common

wealth transfer financial legacy

Many Australians who have yet to retire are actively looking at how they can pass money on to their successors with the lack of information creating opportunities for advice.

The desire to transfer money between generations is not limited to those in retirement, with many people viewing their savings as including a financial legacy, but they lack the knowledge to make that transfer, according to a new study released by Fidelity International.

The “Rainbow’s End” report, produced in conjunction with research firm MyMavins and based on online responses collected in September from 1500 people aged over 26 representing generations Y and X, baby boomers and the silent generation, found across the generations there was a strong preference or obligation to pass on money to their successors.

Fidelity International head of wholesale sales Simon Glazier said: “Most Australians want to share their wealth with the next generation. Four in five people over the age of 27 believe sharing that wealth with the next generation is important.

“Over three in five actually feel it is their responsibility. There’s not a preference, it’s their responsibility. What does that do for retirement planning? What does that do for consumption behaviour? What does that do for savings behaviour? These impacts are really not well understood.”

Glazier noted younger generations are already considering the transfer of wealth, with 36 per cent of gen Y respondents considering how it could be done either before or after their death. That figure climbed to 44 per cent for gen X respondents and 62 per cent for baby boomers.

He added the desire to leave something for the next generation stemmed from a strong “nest-egg mentality” within the Australian retirement savings system.

This was common across the generations, with around 80 per cent of generation X and Y and baby boomer respondents stating they had this mentality due to a lack of certainty that their retirement savings will be sufficient to fund their lifestyle.

There’s a hesitancy to spend early because they want to maintain a nest egg to ensure they’ve still got funds available for spending later in life, but as we evolve through retirement that nest egg becomes something to pass on to future generations. So, no matter where you are in that retirement stage, that nest egg mentality still exists,” he said.

He added the report found that while two in three respondents planned to leave a bequest in their will, less than one in 10 had a comprehensive estate plan to transfer their wealth and there was more scope for the provision of advice across the generations that dealt with estate and succession planning.

“What becomes clear is that financial advisers are in the box seat to make the most of the opportunities. There is clearly a need for professional support and financial planning can play an important role here as it can help investors determine how much wealth is needed to achieve financial legacy goals and planners can also work between family members to ensure legacies are transferred fairly and as efficiently as possible,” he said.

Copyright © SMS Magazine 2024

ABN 43 564 725 109

Benchmark Media

Site design Red Cloud Digital