“The Cost Of Silence – £4 Trillion Reasons To Speak To Your Children”

• 65%^[i]  of millennials said they “do not have a clue” about their future financial plans

But millennials will inherit £4 trillion^[ii]  by as early as 2020

JM Finn explains why silence is not golden when it comes to money matters

JM Finn, the private client wealth manager, reveals that millennials (those born between 1980’s – 2000’s) are set to inherit around £4 trillion by as early as 2020.  However, it warns that a significant proportion of this wealth could be lost to inheritance tax (‘IHT’), capital gains tax (CGT) and intestacy laws due to a worrying lack of conversations around succession planning. It begs the question, that if young adults and parents do not talk about wealth and inheritance, how can they plan for their financial future?

According to its study of nearly 1,000 millennials^[iii], a third (34%) admitted they never talk about finances (wealth and inheritance) as a family. A further 29% say they do talk about finances with family, but only to a very limited degree.  Of those millennials who have never talked to their parents about wealth and inheritance, almost two-thirds (65%) admitted they “did not have a clue” about their future financial plans.  To compound things, a staggeringly low proportion (2.6%) of these millennials have access to a financial adviser or wealth manager to support and advise on the critical decisions around their finances that they will soon grapple with.  Over half (51%) of the study’s millennial respondents are not even planning on getting any financial advice once they receive their inheritance.

Families could be setting themselves up for a large financial loss during any transfer of wealth, as there appears to be a mismatch in expectations between parents and their children.  Half (47%) of millennials believe they are to receive some sort of inheritance from their parent. In fact, as much as two in five of them (21%) are expecting to inherit their parents’ assets between the ages of 35-44; very early indeed.  Meanwhile, 27% of millennials on the more modest side, expect to see their inheritance between the ages of 45-54.

~Novel Serialisation: Heavens Fire~

Anna Murdock, Head of Wealth Planning at JM Finn, comments:

“The stiff upper lip we Brits are so renowned for has led to a break-down in communication, which is set to disadvantage over two-thirds of millennials, leaving them completely unprepared to take appropriate steps to protect their financial interests in later life. In the same way we now talk honestly about mental health and are breaking down those traditional taboos, it’s vital to tackle the ‘final taboo’ around finance, encouraging open conversations about money across the generational divide.

“With a huge amount of intergenerational wealth transfer on the horizon, the lack of financial advice taken by millennials is a red flag. Parents and other asset-owners need to talk about their requests and bequests face-to-face with their children, grandchildren and other beneficiaries – it is simply too costly not to.  Just recently, figures from HMRC^[iv] revealed a record number of people paying capital gains and inheritance taxes; payouts that could be avoided through prudent planning.

“Life Insurance and Trusts are just some of the vehicles that can protect and transfer assets through generations. The sooner families openly discuss these things, the quicker their hard-earned nest egg can be secured and not merely fund the taxman.”

About The Author

JM Finn is a wealth management firm that provide a personalised approach to investment and wealth management for today’s private investors, by placing a dedicated investment manager as the central point of contact for all clients.

With over 100 investment professionals, JM Finn have funds under management and administration of £9.6 billion on behalf of over 18,500 clients (as at September 30^th 2019).  The firm is headquartered in London and has five regional offices in Bristol, Bury St Edmunds, Cardiff, Leeds and Winchester.

JM Finn is authorised and regulated by the Financial Conduct Authority (FCA).

Newgate Censuswide millennial omnibus – 1023 Millennials (18-30year-olds) – 31.01.2019 – 06.02.2019

[ii] $4 trillion In UK and North America as quoted in RBC’s Wealth Transfer Report 2017

https://www.rbcwealthmanagement.com/_global/static/documents/RBC-wealth-transfer-report-2017.pdf

[iii] Newgate Censuswide millennial omnibus – 1023 Millennials (18-30year-olds) – 31.01.2019 – 06.02.2019

[iv] https://www.ft.com/content/db84b420-6764-11e9-a79d-04f350474d62