Sustainable investing and cryptocurrency are trends often associated with younger clients; but just saying that the next generation are interested in ESG and crypto is a “massive generalisation”.
Speaking at FTAdviser’s Financial Advice Forum yesterday (September 28), Priyanka Hindocha, a family office director at Stonehage Fleming, and her fellow panellists addressed some of the myths that can surround the next generation of wealth holders.
Citing families with millennial clients who have inherited wealth, Hindocha said that “actually all they want to do is protect it”.
“They have a slightly different risk tolerance to generations above, where it was maybe more entrepreneurial and they were creating wealth,” she said.
“So some millennial clients just want to have homes in place for their children - housing, education and healthcare, that kind of thing - instead of thinking just about ESG and crypto.”
Also on the panel was Jessica Ayres, a financial consultant at Timothy James & Partners, who likewise said there were “other things” that clients’ children are interested in.
“Clients might want to give money to their children and help them get a mortgage, [but their children] might not know what a mortgage is.
“They might want to understand their student debt, if they have any; they might want to understand about bank accounts. When we’re talking about ‘Gen Z’, they need a proper financial education, which is not given in school.
“So you can give simplistic, holistic advice, and then hopefully they’ll remember you when maybe they’re a bit more wealthier.”
Another perception is that Gen Z prefers digital communication over face-to-face interactions.
Poppy Fox, an investment director at Quilter Cheviot who was also on the panel, said while research has shown that social media is where Gen Z receive most of their information, she added: “That doesn’t mean they’re getting all their information there.”
Also on the panel, Craig Hendry, managing director of Johnston Carmichael Wealth, said the starting point to bridging the intergenerational gap is to understand a client’s wishes.
“When you get that, you can start peeling the layers. Whether it’s wills or power of attorney, that’s when you start bringing in a wider audience.
“I think initially, understanding the wishes, making sure they’re in play and appropriate, and then explaining to the next generation why they are that way. And doing that whilst [the client is] here, as opposed to [their beneficiary] inheriting something, or inheriting a position, and they have no idea why it is laid out the way it is laid out.”
Hindocha from Stonehage Fleming similarly described the risk of not initiating a conversation early enough as “pretty high”.
“Particularly if something unexpected happens,” she said. “If you have your risk hat on, and you’re constantly thinking ‘okay, Dad knows everything and if he gets hit by a bus tomorrow, what happens?’
