Intergenerational Wealth Planning

  • |
  • 36 mins 23 secs

Learning: Structured


  • John Porteous, Head of Distribution, Charles Stanley
  • Charlotte Lambeth, Senior Investment Manager, Charles Stanley
  • Danby Bloch, Head of Editorial Strategy, Platforum

Learning outcomes:

  1. Why the Covid pandemic has transformed the conversation around intergenerational wealth transfer
  2. Why each family and its set of circumstances is unique when it comes to wealth planning
  3. Where advisers can add value in the wealth transfer process
Book of Stories 2.0
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Hello. Welcome to academia With me, Mark Colgate. In this unit, we're gonna be looking at inter generational wealth planning on in particular the importance of learning from clients. It's based around an original piece of research carried out for Charles Stanley called the Book of Stories two point Oh, to discuss it now I am joined by John Portis, head of distribution at Charles Stanley by Charlotte Lambeth, senior investment manager, also from Charles Stanley on by Dambe Block, head of editorial strategy and consultant at PLAT Forum, THEA Organization responsible for conducting research and putting the report together in order to consider the viewing of this academia video as structured learning, you must completely reflective statement to demonstrate what you've learned and it's relevance to you. By the end of this session, you should be able to understand and describe why the curved pandemic has transformed the conversation around intergenerational wealth transfer. Why each family and it's set of circumstances is unique when it comes to wealth. Planning on where advisors can add value in the wealth transfer process, please complete the reflective statement to validate your CPD. Well, John Portis, Let's start with you. Our theme is the importance of learning from clients when it comes to intergenerational planning. How have you bean tackling? This is an issue at Charles Standing. Well, Mark. I think that for a long standing wealth manager, intergenerational wealth has actually been part and parcel off what either our wealth management and financial planners have been doing for for some time. But I think what's really brought this toe head is, of course, where we look at the statistics off the great intergenerational wealth transfer. Many of us know that you know that that is expected to occur over the next 10 years. But what's made this incredibly fascinating is the circumstances that we find ourselves in. When we started this journey, when Dambe and I first connected by a platform and we started with the Book of stories around a year ago, the really big topic was how taboo the discussion between family units waas about wealth. And here we find ourselves having gone through what the most extraordinary year in living memory for the vast majority of this on, we find ourselves that probably the intergenerational wealth discussion on the barriers that sit around, um that have fallen away on many people are finding themselves living in what we're calling a what if generation. You know, many people are saying, Well, what what if this happened to me? What if this happened to my parents? What if this happened to my Children on? We're connecting through these discussions as much as a matter of necessity. Azaz as planning. So we're finding internally within Charles Stanley. Not only is it something that we find interesting academically and something that we find evident within the business that we're in, we're finding that this is rapidly becoming one of the principal planning issues that faces our clients day and day out, they get a damn block, your perspective platform again, just picking up on some of those points that that John has been making. I mean, do you think this was a taboo subjects? And now it's one that is front and center of discussions. I think people have become, ah, lot mawr open and transparent in general terms, but there's a huge range off different opinions and views about it. Um, I think everybody has opened up somewhat on. I think the technology, funnily enough, has made it easier toe have family discussions and get people together. That's Bean, uh, something that advisors generally have commented on, and it makes sense when you pause to think about it. But yes, I think that, you know, money is like sex, and it's like death to which it's intimately connected. In many cases on, it's something we do have taboos about and in these peculiar times, sometimes inhibitions drop away on that seems Toe happened, um, comparing some of the findings from last year with some of the findings from this year. But there's still quite a range off views about it. There's still some people are deeply uptight about talking about money and sometimes a very good reasons because you don't always want to tell your client your your your your Children how much money they're going to get, because you know they may not be very trustworthy or they may be deeply trustworthy. But start looking, Thio, I don't know, put soap on the steps or whatever. They you just wonder about this sort of thing. So some people are reasonable in a reasonable kind of way, a little bit reticent about this sort of thing. Also, it's very hard to predict the future. So, you know, if you're thinking about your family and you say, Well, I'm gonna leave you £2 million and someday all this will be yours, my son or my daughter, you don't know that that's necessarily going to be the case, because you might go into long term care or something like that. So EADS there are still good reasons to be a little reticent on the subject of money. But I think we are a bit more open than we were. Thank you, Charlotte. But there's a senior investment manager. Your meeting clients day to day. How important is it to be listening to what they've got to say versus I suppose you expected trying to raise this is an issue, potentially have some thoughts and ideas on what would work best for them. Well, I always say that the key thing that I do in my role first is listen, um because actually no two clients of the same their family situation, their financial situation, their tax situation on indeed, the things that they find particularly important and motivating to them are always going to be different. So there's no point in me rocking up with a one size fits all solution. You know, e, I might get lucky and it might work for somebody, but it's it's not going to work for an awful lot of people. So the first thing I always have to do is sit down and really listen to what it is that they are trying to achieve, how they feel about where they are at this moment in time, on what what they're trying to do in future Andi. Then my job is to try and reconcile how we move from where we are toe where they want to be. But that journey is going to look very different for different clients. Thank you, John. We've been referencing the book of stories We've done a previous program that's also available in academia about the first book you did. This is the second book now, and we've got links to both of those under the player. But in terms of how you put that book of stories to together on what you think means that it's got value rather than it's just a collection, and it does tell us a little bit about the process of compiling it, she might Well, actually, book of stories came about. The first book came about when Dambe and I had lunch. Onda we were talking about some of the topics that we're talking about today. Onda, we thought within Charles Stanley. Actually, it's really, really impactful to tell stories. You know, we've seen a lot of work around intergenerational that was a compendium of statistics. But nothing really resonated like stories because stories make the whole essence on the uniqueness is dambe. We're seeing the idiosyncratic off the intergenerational discussions come to life. So in the first book of stories, what we actually did is we delved into the deep experience of Charles Stanley itself on interviewed a number of the investment managers and in some instances, clients on talked about. Okay, what were those stories like on then? We started sharing it with advisers and financial planners More broadly in the industry on this really struck a chord on before we knew it, you know, the whole thing had become much bigger than perhaps we expected it to be eso when we decided to kind of go for Booker stories part to you know, the revenge, so to speak. We thought well, we've done Charles Stanley. Why don't we take some of these themes of work so strongly? The story, nature or the and getting underneath the surface of the statistics? But let's look at the wider financial planning market. Let let's actually look at what's going on outside the walls of the Citadel on that. That was incredibly powerful, because what bigger stories told us was the intimacy on Did that the touch and the feel? Andi, the uniqueness of the discussions. What the book of stories 2.0 is told us is right. You know what one of the priorities, What's the value that people see in this? What's important, what is scary? What are the things that people really, really want to to know about? Andi was really enlightening because I think sometimes when we look internally, we can see things through a certain lens. But it's very healthy to sort of superimposed that against Okay, what's happening more broadly, so we learn as an organization. But again, I think that the the early stage back about because stories 2.0 is this has had the same, if not an even greater impact in the first book in just the way that we position that debate and how accessible fellow practitioners and professionals have found that in terms of their day to day work with our clients, thank you and damn it. I mean, on top of everything else you're working with Platform, you've also got a background working as an eye. FAA's attacks, sex. But, Aziz, you look the book overall. What would you say really strikes you, as I say, what's useful to an advisor rather than what's interesting? Well, it is very interesting. I mean, let's not completely lose that. I had an enormously interesting and exciting time talking toe the financial advisors, because we way talk to the two members of the public, Um, in groups and Tutu's and singles. We talked to single advisers and we talked to groups of advisers and we chose the advisers very carefully for people who were in the right part of the market and with an enormous amount of insight, knowledge and experience. So we were talking to people who were extremely good at their job, and it's always very illuminating to listen to people who are extremely good at their job. Also quite nice. because on the whole financial advisors a very nice, sympathetic people because that's what they do. That's what they're good at, getting under the skin of the clients. And we learned a whole range of, ah individual things about separate things about about what, um, advisors do for their clients what they can do. One of the things that I'd like to reinforce, Charlotte said. Very basic. It sounds incredibly basic, but it's very important, which is to listen. And somebody put it. We didn't actually included in the book, but for somebody put it very, very nicely that were given two years and two eyes and one mouth on. We should use each of those in that proportion on. There's a huge amount of of of wisdom in that we learned about the enormous range of clients that it's really important to listen to them on. Not to go in with prejudice is your own prejudices, but to listen to the clients and go with them because just take the example of fairness. What one is what one client thinks is fair, another client will think is absolutely dreadful. What one client will think is appropriate to do for their their Children. Another client will think of. And I wouldn't dream of doing that. A tall, um, an anecdote from my own experience when I was actively advising financial planners a clients as a financial planner, a businessman brought his son into the business. His son. I started stealing from the business. That was a shock. Then the father found out about it. Press charges on the sun went to prison. That was a really shock. I mean, how many? How many fathers would do that? How many sons would do that? It z extraordinary, the range of experience that you're going to come across, so one needs to be flexible. One needs to be ingenious. Someone needs to listen. We'll start picking up on that theme of fairness is an adviser. How do you work out what e. It's your job to be fair on behalf of the entire family or to be your consideration. What fair is or what extends is it to be representing one person's wishes and how they apply to the rest of the family? Well, I think certainly a Zay said before. The first thing I need to do is to listen to what the client is trying to achieve. So that's always my starting point trying to really work out what what they're trying to do. There are times, I think, where it's a appropriate for us to play. Devil's Advocate MM Andi. Potentially in situations where perhaps family structures are a bit more complicated, as they so often are these days, it can be useful to just make sure that a client has thought through all the different permutations and thought how other parties might view a concept that they've come up with. So it's not that I won't challenge clients, but it's not necessarily from coming from a place of. I don't think you should do this. It's just saying, Have you made sure that this is going to be informed and educated decision if you go ahead with it? But we said all the time classic situation would be where maybe there's more than one child. One of them has managed to dio well for themselves financially and is in a secure position. One of them, perhaps, for whatever reason, eyes in a less secure position. I perhaps they've been through a family down. Or maybe they just went into a less financially rewarding career or whatever it might be. Andi. I very much have seen Aled the options in ways of dealing with that from, well, I just need to split everything equally between the Children. That's the fair route through too well so and so really doesn't need it on the other child really does need it. So actually, the fair thing to do is to reward them. I think the one thing that I would always encourage it's not that either of those roots is necessarily wrong. But I do think it's so important that families communicated because often siblings will be very supportive of those decisions on would possibly even come to them themselves if they were asked. But I think if they're not taken through the thought processes that have got the parent, perhaps to that decision, that's where maybe there can be some resentment and bad feeling and so on that can come in. So I always encourage communication as well and she just pick it. I mean, I take your point about the importance of that transparency and getting everybody's buying, but is there a dangerous an advisor that you end up getting used to have the conversations and perhaps do some of the work that somebody else is really somebody else's responsibility in the family. Thio have How do you manage that element? Oh, well, I mean, this job definitely goes way beyond purely being a professional advisor on a basis, you know, part therapist, part financial advisor, Part D I y guru. Half the time. Um, yes, I think there probably are times where I found myself in a situation where when you are involved with different elements of the family And I mean, you know, just this'll week I've started a client, take on process for a new new member of a family that's going to be once again the fourth generation of the same family that we're doing a same time so often you will be aware of different elements that are going on for for people at different levels in the generations. And it is tricky balancing your obligation to be confidential about what's going on for your clients, whilst also making sure that where you're aware of particular set of circumstances, you're making sure that that's being allowed for in that wider discussion. So sometimes you will find yourself feeding a concept into a discussion to then allow someone to pick up a ball and run with it. So difficult conversation certainly can be a key part of the job. Yeah, and John and your experience. How do you build in flexibility, which Dambe referred to earlier? I mean, presumably, is that is that tougher for a family that's been around for 456 generations and has an incredibly long term view on what it is and how long it's going to survive versus, I think, planning a bit of school fees, you know, a bit of school fees planning from one generation to another, which presumably is much more contained. Transfer of wealth. Yeah, I think I think we've been touching at it. I mean, I m 25 years of experience of dealing with clients, and I think one of the strongest conclusions I've drawn from that is the power of questioning. Andi, I think this in terms off intergenerational planning is a fantastic example. Off the power off, effective questioning. So you talked about flexibility. You know, Andi, I think that this is really interesting, because when you question the different degrees of flexibility in different attitudes around wealth. There are some really powerful questions. You know what's what's what's your relationship with money? You know what, what past experiences of If you had around money, What does money mean to you? What role has money played within its life? Have you had any unfortunate events in the way that Dambe has described the money? All these experiences actually color your starting point on. I think that these sort of sometimes almost irreconcilable things can be brought to the surface through effective questioning. Great advisors in this space that I've worked with and I've seen and I've seen their business models are really, really great questioners on really, really excellent listeners. What they do is they leave their ego at the door on they facilitate the discussion, and the power of the discussion comes from the client, not from them. On picking up on that damn me. When you've been a advisor and talking with clients, how easy is it? How does it take till you think you've completely understood the story? Because presumably if their particular there's a bit of a dispute, there could be you could be getting quite a color perspective on what's going on. It's not necessarily the whole story. No, well, that Z always a danger. And the idea that you're ever going to get a complete picture off quite a lot of family situations is probably wrong. It z very hard to get a complete picture, part something else. Things change. Um, I think that what one needs to do is tow, have, try and gain on understanding of all the possible or many of the possibilities that can come out of a particular situation out of a divorce or a marriage or a relationship breaking up or coming together. Or or Children being a different success academically or financially or whatever. And having ah, store of experience and understanding to be able to ask the right questions. Well, have you thought of this, or have you thought of that possibility? Or you might consider doing this. You know, you might consider having a giving them alone rather than making a gift of this particular Um, and I think the thing that the the the Book of Stories does which I think is particularly helpful is to give you a sort of shortcut to that level of wisdom about the whole, very wide range of human experiences when they interact with their finances. You know, the A lot of advisers nowadays are extraordinarily well, well equipped technically, but they lack some of the experience and some of the soft skills. And I think that what the the book of stories does is to provide you with those war stories on which you can draw on which you can use as examples or just help you to frame the questions and make the imaginative leaps about this might happen, or this might be a danger, or this might be an opportunity. And I think what you want is for the client to come back to you 10 years after you gave the piece of advice that you did, or you help them to come to the conclusion that they needed to come to, because that's probably the way it goes. And they don't say to you. This happened and I hadn't thought of it a tall that you will have at least raised the possibility of something happened, and they took it into account, and they did whatever they did. But they covered all the bases. Thank you sure? I mean, we've talked generally about how each situation is different, but just be a little bit more specific. I mean, for you, with your client base down in the West country, are there. E won't say. Clearly all clients different, but are there particular types of issues, for example, that they would face there? That which would be very different from if you had a client base of people, all who worked and lived within a couple of miles of the city of London, for example? I think so. I mean, I'm sure in in all sorts of different ways, people will have client banks to their own different cultural issues and so on. But, you know, thinking about the clients that I see down in Devon, um, there could be quite a big difference, particularly in the attitude to money. I think both both John and Dan be there have been this sort of the baggage that people bring. Two, they're thinking about money, and we see it in lots of different ways. We get a lot of people who retire down to this part of the world so they may be built up a successful business, you know, sold valuable property and so on in perhaps the Southeast on. Then they come and retire down to us. So you might have lots of self made entrepreneurs who maybe are the first General Thio accumulate that wealth on. They might have a very different approach to perhaps some of our agricultural families that we're dealing with where you're looking at farms that have been passing generation to generation for hundreds of years. In some cases, um, where again there's there's perhaps a slightly different attitude to it, Andi. I think even amongst that, we often find that maybe even within the same family, you can find us a different attitude to say. Inherited wealth versus earned wealth. So I will often hear, Oh, this part of money I inherited from my parents Or, you know, it came to me from grand parents or an aunt or uncle or something on. That's for the Children. You know, I need to make sure that that's then going to go on and help the Children and grandchildren. But this part of money is what we've learned, what we've done, what we've created. Andi, that's much MAWR now going to fund the lifestyle in retirement. That's what's gonna do the ability to travel when we can. Andi that sort of thing. And so the attitude of, um, skiers and spending the kids, inheritance and all that sort of thing perhaps, perhaps comes more to the fore. So you might have an individual coming on one side of the fence or that. But even within a family, they might have different parts that they have different views attached to. Thank you, John. We talked a lot about the value of the adviser in this, but from the book of stories and the interviews and research you did, does the end client have the same idea of what the advisers value is as the advisor thinks their value is, Um, somewhat, inevitably, no, uh, there are always going to be differences, and I think that being Charlie make some really excellent points. I mean, if you take Charlotte's point about different generations of wealth on, do you know first generation multiple generations? Farming business is a case in point, you know, the the In some instances, the value could just simply be facilitating a discussion that we should have had years and years ago, and we've never been able tohave it that that that could be utterly profound For an entrepreneur, it might be very binary, You know, I wanted to do this. You have done that. It's done in exactly the same way that I wanted to do. I think that one of the really important things that's happening at an industry level for us, the regulators encouraging it but at an industry level is we are increasingly engaging with clients both as a firm on more broadly across the industry to get this feedback to go. You know what, What does value look like to you? What difference does this make to you? Because a number of firms at the moment have customer satisfaction surveys on That gives you one dimension on it, but it But it's not. It's not multiple in its dimensions on I think what we're certainly doing is commissioning Maura Maura client work to see what what's the real value add that we give you and why? Because by definition, once we understand that we'll do more of it. It's it's a really logical thing on. I think that that's the one powerful thing that I've seen from this light dislocation between the value add that an advisor would say that they give the value, add that a client will feel that they give Onda. Ultimately, I firmly believe that value is in the eye of the beholder. So the closer that we can get toe what really moves and makes a difference to the client is what is going to make a successful as a profession. On for us is a firm like a Don't be taken about everything. You, you and your fellow Panelists have said about the importance of listening, getting the whole picture transparency after that. There then comes the you know, the business of moving the money, thinking about the money, planning it. How important is it to get your tax planning writers part of that? I mean again, if you're gonna be in the intergenerational wealth space space, is that e do you? Is there a certain level you need to be at in terms of qualifications and taxpaying before you can be confident of mixing isis CGT allowances, pensions, all of that sort of stuff? I think that is, I think that is important. I mean, I think it's something that plants appreciate. Advisers understand that they need to do. And it's a sort of element of Alfa, if you like outside the investment process, which could make a tremendous difference to the actual returns that the clients get on. But I think that it's really important that advisors keep up to date with tax changes because, you know, things have changed quite a lot over the last 10 years, and what work 10 years ago certainly doesn't necessarily work today, and you really got to keep on top of that. I'm not sure that every advisers got to be a tax expert. What they need to do is tow work within a framework for the advice within the firm that they've got so that they understand that they need to do the basic things like harvest gains each year to use the allowance and possibly the basic rate band and things like like that in the investments on. They really need to understand about inheritance tax at the fundamental levels in order that they can use the right tools for the job on. Then, when the really complicated stuff comes along, they need to know what their limitations are and get in. The expert on recognizing the limitations, I think, is one of the crucial things that advisors conduce Andi. It's always good to remain within one's comfort zone on not step out of it. But when you have to step out of it, get somebody who really knows what they're talking about. But it is a very important thing in terms of what clients expect you to produce. You do need the you do need the technical answers for the clients. They are looking to you for investment advice. That was one of the things they have right up there, and they do look to you for trusted devices and taxation and so forth. Well, some clients were really obsessed with inheritance tax planning on some clients. The Children can get what they get it it's It's very interesting the the range of attitudes to say, inheritance, tax planning on how it changes over time as people get older. Well, just picking up on that point of advice, Sean, when we've been talking about this, there's been perhaps we've been given the impression that as an adviser, you're the only adviser to that family looking into generational wealth planning. Firstly, is that the case? And if not, if you got any tips on how you can work with other advisers to make sure that you've got a proper, holistic plan for everyone, well, I think it is a really important point and down. He's absolutely right there to say that you've got all sorts of different elements that need to be pulled together on DSO, some of which really do require a high level of technical expertise. And I think that's where it's really important as advisers that we don't get, um, territorial over this sort of thing. You know, they recognize we're gonna have to work in conjunction with other advisers on I'm regularly having sessions where I've got perhaps someone's private client solicitor, their accountant, their financial planner, all of us coming together in perhaps literally away or maybe having had pre sessions between some of us and then, you know, ah, select view, attending a meeting to sort of pull a plan together, but were regularly working in groups across the disciplines because you've got lots of different dimensions that need to work together. I think again thinking of taxation, as as an example you know it's one area when you're thinking about the family. Of course, often what you're trying to work out is where the tax burden is going to fall because there usually isn't an option that's just purely tax free. But you might be deciding well. Are we in capital gains tax now, or are we paying inheritance tax in the future on its weighing up? What the impact on the different elements of the family will be making sure they understand that and they then make an informed decision about where it's going to be best for that to fall on. I think there's a final point on that. It's interesting one of the places that I think we do see generational differences in approach. And this is another thing that's that's covered in the book of stories, that Chilean attitude to taxation. I think using capital gains as an example. The older generations we'll have spent a lot of time with capital gains being actually taxed quite heavily for periods, and it therefore being something that they would quite like to avoid in many cases, think actually things have changed quite a lot relatively at the moment. It looks, perhaps a more cost effective solutions, sometimes to some of the problems that we're facing. But it can be one of those emotional barriers. There's anything else that we need to get clients over the line with to consider. I think perhaps the younger generations are often mawr open minded about the fact there might be taxed to pay and that that's just part and parcel off organizing and creating a sensible package. So again, um, bringing the different parties together and coming up with a solution there are comfortable with really important. Thank you know, we're almost out of times. But I wanted John Justo finish with you and get final thought from you. If there was one key call to action from book of stories Part two, what would it be? I great question. I mean, I think the point is that right here right now, as I think we've all agreed this discussion is live and happening on. Clients really need toe work with their advisers through a combination off I Q and Q. So it is the ability to facilitate question, um, control these discussions, but add some value in the way that dambe and Charlotte we're talking about in terms of, you know, the requisite information to help them build plans. Andi, I think I've heard a number of people saying, Well, I can't really do this because I need to sit down face to face with my clients. Well, actually, my call to action would be. I think increasingly people are prepared to have this conversation with their trusted adviser over video conference on digital means because as we were talking about before we started recording here, the end of this pandemic is not an absolute certainty. But what is an absolute certainties? These discussions are happening now, so if you like the point at which advice, planning, guidance is required, and valued is also now. And I think the one thing that the book of stories talks about is that sort of nexus between financial planner on wealth manager ads really value and therefore my call to action would be to connect now with your clients because I'm certain that discussion is life. We have to leave it there. Do you stay with us? We've got some information coming up in a second on how you can use this as part of your structured learning. It just remains for me now to thank our fantastic Panelists. John Fortius, Charlotte, Lambeth on Damn! Be blocked from all of us here. Thank you for watching goodbye. For now. In order to consider the viewing of this academia video as structured learning, you must completely reflective statement to demonstrate what you've learned on its relevance to you. By the end of this session, you should be able to understand and describe why the curved pandemic has transformed the conversation around intergenerational wealth transfer. Why each family and it's set of circumstances is unique when it comes to wealth planning on where advisors can add value in the wealth transfer process, please complete the reflective statement to validate your CPD.

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