Harness Intergenerational Wealth with the Help of Cash

Aug 12th 2020

It’s undeniable that financial advisers have played a major role in helping older generations grow their wealth to unprecedented levels over the past few decades. We are also approaching the time when this wealth will be passed down in the largest predicted intergenerational wealth transfer the UK has ever seen.

Intergenerational wealth transfer is widely recognised as both the biggest challenge and biggest opportunity to face financial advisers in the near future, and so in this article, we explore how a cash management service like Insignis Cash Solutions can help you to build an early relationship with beneficiaries in the younger generations, and use cash to open the door to a potentially huge number of clients inheriting a multitude of assets.

Wealth transfers between clients and their beneficiaries in 2017 totalled £69bn1, a substantial amount, yet the Kings Court Trust has estimated that £5.5 trillion will pass between generations within the next 30 years2, inevitably creating massive opportunities for the advisory business. These unprecedented increases are due to older generations living longer, holding onto assets for longer, increasing their net worth as a result. With this being the shape of things to come, planning for your current clients’ beneficiaries could be a significant source of new business.

The challenge facing advisers is to build an intergenerational relationship with clients and their beneficiaries before the wealth transfer happens, and these conversations can understandably be difficult. We believe cash can be a powerful door-opener, acting as a transmission mechanism to fulfil the needs of the next generation as they evolve from spenders to investors themselves. Cash is so powerful because it is a constant—a fundamental asset for all parties—both before and after the wealth transfer.

Clients often hold a portion of their portfolio in cash for ease of access, but also may choose to set up a trust for their beneficiaries, also held in cash. As clients age, it is often the case that they will specify a Power of Attorney, with their children as the attorneys over the cash balances. When the wealth transfer happens, and beneficiaries gain access to these assets, it is almost certain that cash will be held. Using a cash management product at an early stage can involve beneficiaries in the process upfront and start the relationship-building exercise. Ensuring your clients’ cash deposits are looked after can be an effective mechanism, not only to have your clients’ cash balances earning competitive returns, but also to open the conversation with their beneficiaries.

We cater for a wide range of clients, including individuals, businesses, trusts, Power of Attorney, pensions, and many more. We have digital partnerships with 30 banks in the UK and offer a wide range of deposit products tailored to your clients’ liquidity requirements. Our aim is to give your clients a competitive blended interest rate, whilst also ensuring their funds are eligible for maximum FSCS protection. We partner with many adviser firms, working together to offer their clients a cash product through our platform, and make sure that a personalised experience for clients and advisers lies at the core of our offering. Every single client that uses our service also gets a dedicated account manager to help execute on their cash balances, and our adviser partners have full oversight of their clients’ cash balances, allowing them to understand the true wealth of their clients, and plan for generations to come.

Insignis sees families and their trusts as single clients and manage their respective portfolios holistically, while applying a fee structure to the total funds under direction. This means all generations can benefit from our service on a coordinated basis.

The next 30 years will create more exciting opportunities for advisers than any other period in history. Cash will be paramount in harnessing funds that have been passed from clients to beneficiaries, and by introducing your clients to cash products now, you will give yourself a future advantage in building the relationship with their beneficiaries.

1 Kings Court Trust, ‘Passing on the Pounds – The rise of the UK’s inheritance economy’. 2017, p. 3
2 Kings Court Trust, ‘Wealth Transfer in the UK – The continuing story of the inheritance economy’. 2018, p. 2