CoreData study finds UK IFAs to lose more than half of next generation clients

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A new study from CoreData finds that UK financial advisers are failing to adequately prepare for the wealth transfer and expect to lose more than half of next generation clients.

Financial advisers in the UK think only 42 per cent of client heirs will retain their services after the primary client passes away. Advisers in the US expect a higher percentage (57 per cent) of heirs to stay with them.

The study, which surveyed 520 advisers across the UK and the US, shows advisers are struggling to engage with the heirs of existing clients. Indeed, one in five (19 per cent) UK advisers never meet the children or heirs of primary clients — higher than the one in 10 (11 per cent) US advisers who never meet client heirs.

In addition, more than a third of advisers in the UK (35 per cent) meet the heirs of clients less than once a year. This compares to half (51 per cent) of US advisers meeting heirs less than once a year.

Despite these low levels of engagement, when asked what they are doing to retain the heirs of primary clients when they pass away, more than half (56 per cent) of UK advisers and three-quarters (73 per cent) of US advisers say they are actively building relationships with heirs.

“These findings reveal a worrying disconnect between what advisers purport to be doing to prepare for the intergenerational wealth transfer and what they are actually doing in practice,” says Craig Phillips, head of International, CoreData Research.

Other measures UK advisers claim to be taking to retain next generation clients include encouraging existing clients to put together an estate plan (68 per cent) and offering free services to client heirs while primary clients are still alive (32 per cent). Three in 10 are improving their technology and digital tools (30 per cent).

While UK advisers may not be taking concrete steps to engage with client heirs, they nevertheless point to attracting younger generations (83 per cent) and the wealth transfer (81 per cent) as two of their top three most challenging business risks.

Regulation and disclosure (94 per cent) is seen as the number one business risk – something that UK advisers consider more challenging than their US peers (84 per cent).

“Regulation is something that advisers on both sides of the Atlantic find challenging,” added Phillips. “But while advisers cannot rewrite the regulatory rulebook, they can and must implement actionable, family-centric strategies to engage with and retain client heirs — measures that will help future-proof their businesses.”

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Beverly Chandler
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