Leveraging innovation to deliver multigenerational advice

By Anne Hamieh*

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Insights:

• The transfer of wealth from High-Net-Worth (HNW) clients is accelerating, with many bringing forward their plans for intergenerational wealth transfer.
• This shift is impacting a wider demographic, reshaping the multigenerational advice needs of HNW clients and highlighting the gap in unmet advice.
• Leveraging innovative investment options will be crucial in offering flexible and efficient solutions that cater to the needs of multiple generations.

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As the transfer of wealth accelerates, private wealth advisers who deliver advice to HNW clients, must embrace innovative solutions to meet their client’s evolving intergenerational needs.

The growing wave of intergenerational wealth is impacting the HNW segment, creating both challenges and opportunities for private wealth advisers delivering advice to HNW clients.

According to the 2024 Investment Trends High Net Worth Investor Report, 33% of HNW investors with a growing pool of funds are initiating their wealth transfer plans, up from 25% last year.¹

This trend is even more pronounced for advised clients with 39% reporting they have already commenced their transfer plans, up 13% from 26% last year.

At the same time, there is an emerging trend for HNW investors to move away from an advice relationship, with the number advised dropping from 180,000 to 150,000. Additionally, satisfaction from private wealth clients has decreased, with Net Promoter Scores at +2%, a significant decline from +14% in 2023.

With $3.5 trillion in assets set to be transferred by 2050, this is not only significant but will also impact several generations.²

Further, the profile of HNW investors is changing and are more likely than ever before to be women under 40 years of age.³

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Unlocking the opportunity

Primarily driven by unmet advice needs, the key to meeting these challenges and servicing a more diverse segment will be leveraging innovative and flexible solutions that provide functionality while also offering customisation and choice.

Managed accounts continue to support advisers to drive business efficiencies and to deliver a cost-effective value proposition and a better client experience. They enable advisers to implement their investment advice more efficiently and to strengthen their investment solutions.

In addition to these benefits and seeking to meet the needs of multigenerational clients, advisers can also provide long-term value for their clients, helping them navigate the complexities of wealth transfer while addressing the unique needs of each generation.

Innovation such as HUB24 Discover enables advisers to further utilise managed accounts for a broader range of clients, delivering a low-cost solution that can be used with early-stage wealth accumulators, later stage retirees, and anyone with less complex investment needs.

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Investment options matter to HNW investors

Intergenerational planning is in the top three most important driving elements of Net Promoter Scores (85%), second to quality of investment research (100%) and followed by investment performance (64%).

Given the importance of investment research and choice, accessing a range of investments is critical for servicing HNW clients. Alternative investments offer considerable diversification opportunities, making it an attractive asset class for HNW clients.

Investment Trends highlights the increasing demand from HNW investors for alternative investments, who collectively control $3.4 trillion in investable assets. However, it is important investment solutions offer choice and diversification to advisers so they can meet their client’s needs.

HUB24 provides access to an expansive range of alternative investments, including private debt, private equity, unlisted property, unlisted infrastructure and hedge funds, to support the diverse needs of both retail and wholesale clients. Through a collaboration with Reach Alternative Investments HUB24 will provide access to high-quality private equity and private credit investments traditionally difficult to access in Australia, providing HNW clients and their advisers with the investment choice they require to build tailored investment portfolios.

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Conclusion

Multi-generational advice can assist advisers meet the emerging opportunities presented by the transfer of intergenerational wealth.

By leveraging innovative solutions to support their value proposition, advisers can optimise the value of the advice delivered while future proofing client relationships.

1 Investment Trends High Net Worth Report 2024.
2 2021 Productivity Commission report Wealth Transfers and their Economic Effects November 2021.
3 HUB24 2023 Directing the Matrix: Meeting the needs of HNW Clients.

*Anne Hamieh is Head of Broking and Private Wealth Distribution, HUB24.