Over 55s Anxious About Younger Beneficiaries Financial Naivety
Much is said about the plight of generation rent and the difficult situation they are in when potential inheritance is their only realistic way of affording a property.
However, a recent report by Sanlam UK has also stated that the overwhelming majority of people aged of 55 are increasingly anxious about how their inheritance gift will be spent.
The Generation Game report, focusing on the inter generational wealth transfer, has found that the average inheritance amount is currently £257,000. With such a substantial pot on offer, the older generation, is struggling to trust the financial decisions of today’s youths.
48% of people aged over 55 are deeply concerned about how the next generation will use their inheritance. 59% of those surveyed worry that millennial’s do not have the adequate understanding of financial planning to spend the money wisely.
The overriding fear remains a belief that younger people are not provided with appropriate financial advice. 61% believe that young people use a DIY approach to financial planning and are therefore not getting the appropriate support they need to make beneficial decisions. 59% want their beneficiaries to consult a financial adviser before they inherit with a further 33% insisting that an adviser familiar with the estate’s finances be used.
Despite this anxiety and inherent need for the youth to consult financial advisers, the report also highlighted a clear and worrying refusal to openly discuss these matters. A mere 9% of respondents have brought up their inheritance concerns with the intended beneficiaries.
Incredibly, 35% have not discussed their inheritance with their younger beneficiaries and 72% believe that it is not just the responsibility of the donor to bring up the issue.
Penny Lovell, CEO of Sanlam UK’s Private Office, said: “The matter of inheritance can be difficult and emotional for anyone to approach. It is not every day that we have to consider what happens to our money when we have passed away. However, it is too serious a subject to be ignored. Conversations about passing down wealth should be tackled early, so everyone in the family is clear how much will be left. This allows all parties to plan and, despite the sensitive nature of the subject, delivers great peace of mind.
“Financial advisers can help support this process. They will very often know members of the same family and will have an understanding of family finances. In many cases, financial advisers can provide an objective, third party view as to how wealth should be passed down and managed. This is not only reassuring, but can ensure money is managed more successfully through the generations.”
At a time when wages are slowing in real terms and the younger generation is struggling to set themselves up for the present, let alone the future, it is clear that money will naturally be spent on more selfish things like debt or housing solutions. Despite the concern, this may not highlight a naive need for additional financial advice.
Should the older generation view the younger generation as naive? Should more help be offered to those inheriting large sums of money?