Top three concerns are inheritance tax, maintaining lifestyles in later life and when to gift
72% across age groups feel they need guidance on taxation and efficient planning
33% of women are concerned about maintaining their lifestyle in later life vs 21% of men
80% of 25-34-year-olds feel the weight of the responsibility of managing and preserving wealth
82% of 35-54-year-olds feel the need for guidance in educating the next generation about wealth management
New research conducted by RBC Wealth Management, part of Royal Bank of Canada, shows that inheritance tax (IHT) is the number one immediate concern for high net worth individuals (HNWIs) surveyed in the UK across age groups and gender.
IHT is of particular concern for almost half of those aged 66+ (45%), but 72% of all respondents feel they need guidance on taxation and efficient planning.
Not knowing the amount of wealth needed to maintain lifestyles in retirement and later life is the second greatest concern for HNWIs overall, particularly for those in pre-retirement ages (38%) and women (33% compared to 21% of men). This is less of a concern for younger respondents (17% of 25-34-year-olds and 21% of 35-54-year-olds).
The third major concern is gifting without losing control or giving too much too soon, particularly for those aged over 55 (30% vs 17% for 25-54-year-olds). 19% of over 55-year-olds said they worry about transferring wealth to beneficiaries prematurely to help navigate the rising cost of living, compared with 22% of 35-54-year-olds.
The study found that younger respondents feel the weight of responsibility of managing and preserving wealth more than the older generation (80% of 25-34-year-olds vs 37% of 55-65-year-olds). Female respondents also expressed more concern over the responsibility of managing wealth (61% vs 49% of male of respondents).
The research found that 76% of all HNWIs feel they need guidance for investment management, particularly female respondents. According to the survey, men are a lot more confident than women when it comes to investment management and diversifying assets (60% vs 45%).
Commenting on the findings of the survey, Nick Ritchie, Senior Director, Wealth Planning at RBC Wealth Management, said:
“We continue to see the detrimental impact of low levels of financial education in the UK and the subsequent concern around managing, preserving and transferring wealth. Our research found that 82% of 35-54-year-olds want support in educating the next generation whilst they themselves worry about the responsibility of managing and preserving their own wealth, with 35% feeling the need for more guidance. This concern is all the more magnified as we embark on the greatest generational wealth transfer in history against a backdrop of economic uncertainty and persistent cost of living pressures.
“Ultimately whether young or old, newly wealthy or from well-established generations of wealth, there should always be a place to learn, grow and challenge what clients know about personal finance. Working with a wealth manager will help high-net-worth individuals on this journey and ensure that plans remain future-proofed and fluid in line with their evolving goals.”
Katherine Waller, Head of New Sales Delivery at RBC Wealth Management, added:
“In recent years, we’ve increasingly seen diverging generational attitudes towards wealth management and how wealth should be invested.
Now more than ever, it is crucial for wealth managers to adapt and offer highly personalised services to meet the diverse needs of clients. This includes forming multi-generational teams, using financial education to help resolve conflicts around wealth management and understanding what and whom else might influence decision-making.
Catering to a more tech-savvy generation, often with a higher risk appetite and greater focus on values, means carefully considering communication channels and how we engage with them.
At RBC, ensuring that we understand the purpose of our clients’ wealth has always been our highest priority.”