Intergenerational Wealth transfer and Covid-19

Many advisers recognised that the opportunity doesn’t come without challenges but has the Covid-19 pandemic prompted further considerations?



Gillian Hepburn
Commerical Director, Benchmark Capital

How has Covid-19 impacted intergenerational wealth transfer? Last year many adviser businesses woke up to the fact that £5.5 trillion of assets will move from one generation to the next over the next 30 years.

This intergenerational opportunity doesn’t come without challenges, which include:

  • Developing the right skills to address wealth transfer
  • How to engage with the next generation
  • How to build a profitable proposition to help retain transferred assets

Now, the Covid-19 pandemic has brought further considerations to the fore:

  1. Is the inheritance reducing?

Whilst the saving ratio has increased for some in lockdown, for many it’s a different story; consider those wishing to pass on some of their pension pot.  

Whilst market volatility may have reduced this asset, recent indications are that in 40% of drawdown cases, withdrawal rates have reached 8%[1] - depleting the pot! It’s no surprise therefore that 73% of clients worry about retirement income lasting and are choosing not to gift money.

More than 3 million savers[2] have reduced their pensions contributions due to financial hardship and anecdotal evidence points to many taking tax-free cash now to help fund their family through the crisis.

  1. Do I need an ESG solution?

Our recent Covid-19 survey[3] indicated that 88% of financial advisers agreed that the crisis reinforced the importance of stewardship and active engagement with companies and 65% said that they would increase the attention they pay to ESG risks associated with investments.

This isn’t just about the reduction in pollution and impact on climate change. The pandemic has heightened the focus on the ‘Social’ and ‘Governance’ factors when selecting investments.

  1. Can technology help to build a new proposition?

We have all become more expert in using technology in recent months.  So can it support a low-cost, lighter touch proposition to help engage that next generation?   

  1. Are difficult conversations easier?

One of the challenges often quoted with wealth transfer is how to facilitate difficult family conversations.

The mortality of loved ones is a subject few wish to address, but the pandemic will have put the issue front-of-mind for many more people.  In March, Google searches for ‘wills’ increased by 40% which could be a sign that tackling the thorny subject of inheritance with families could be easier for Advisers in the future.

Isn’t it sad that it takes a global pandemic for people to address this?

[1] ABI research

[2] Scottish Widows research

[3] Schroders Adviser Covid-19 survey

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Gillian Hepburn
Commerical Director, Benchmark Capital


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