Home Finance & Investments How taking a cross-generational approach to financial planning is key

How taking a cross-generational approach to financial planning is key

During the pandemic, the UK achieved its record number of millionaires ‐ or, ultra‐high net worth individuals (UHNWIs) as they are euphemistically called.

Here John Winstanley, Chartered Financial Planner, at Clarion Wealth Planning talks about how Clarion approaches things a little differently, thinking not just of the wealthy individuals but their families as well, aiming to create better lives for successful family people who value trusted advice.

“Even when a client comes to us alone, it is almost impossible to treat them as an island. The decisions we make together will affect their family and their businesses. We favour a cross‐generational approach to financial planning, working directly with the client and their family to help them achieve their goals.

“Wealthy families are perceived to have few money worries. In reality, they too have a significant – if entirely different ‐ set of financial concerns.

“Whilst they tend not to be so preoccupied with thoughts such as how to pay for their child’s education, they are more likely to require expertise in succession planning for the family business, how to efficiently and generously support charities, and support and advice in transferring wealth across multiple generations.

“It is an often‐quoted axiom that family wealth rarely lasts beyond the grandchildren. According to the Williams Group wealth consultancy, 70 percent of wealthy families lose their riches by the second generation, and 90 percent by the third.

“To preserve a very high standard of living for the family lineage, intelligent financial planning decisions are needed to manage, protect, and grow family wealth.

“The need for good financial management is the price to be paid for such financial comfort. The more money one has, the larger the investment portfolio and the increasing number of properties, the more work it takes to maintain and preserve those assets.

“Talking finances within families is still seen as not quite the done thing. But it is central to the Clarion Way – delaying it could put your wealth at risk.

“With modern families becoming more complex with divorces, second marriages, and stepchildren, Clarion encourages in‐depth discussions to explore aspirations in detail and to help people prioritise them in order of importance with their values and goals analysis.

“Knowing the older generation’s financial wishes in advance will avoid devastating rows at some of the most difficult periods of people’s lives such as following a bereavement.

“In the most affluent families, there can be an understandable desire to shield children from the excesses and to foster a strong work ethic and balanced approach to spending in adulthood.

“However, the younger generation needs to understand the responsibilities resulting from the stewardship of the family fortune before it comes into their hands.

“By introducing the scions of your family to your financial advisors our clients can rest easy that if something were to happen to them, their family would be able to talk to someone they already know who understands all the details of their financial affairs and can help them through what would certainly be a very difficult period.”