Much has been made of the trillions in inheritance that is due to be transferred between generations in the next decade.
Since the introduction of the Retail Distribution Review, a lot of this wealth has been invested in pensions and Isas, often via the likes of discretionary portfolios.
However, Rose St Louis, protection director at Scottish Widows, says that this asset gathering has not been matched with effective protection policies, leaving investors potentially vulnerable, especially if they intend to leave an inheritance for their descendants.
FTAdviser In Focus spoke to St Louis to hear her thoughts on how advisers should broach these conversations, and ensure clients' portfolios are future-proofed.
FTAdviser: How has awareness around protection policies in the context of intergenerational planning changed over the past five years?
Rose St Louis: Intergenerational planning is terminology typically associated with wealth and investments. However, increasingly as an industry we are beginning to question what this movement means for protection.
Holistic financial planning is made up of asset creation and asset preservation. Given that the biggest and most important asset any individual has is themselves and their ability to generate an income, asset preservation is crucial.
FTA: Do the generations who will be inheriting wealth over the next ten years have a different attitude towards protection policies?
RSL: There has been much discussion over the years regarding the need to create a savings culture which many of our parents and grandparents used to have. I believe the same is true for protection.
There needs to be education and understanding in both areas so simply inheriting wealth will not create those behaviours.
As an industry we need to do a better job of educating not just inheriting generations but all consumers about the value of protection.
There has been an increase in the number of people going to the web to search and buy protection highlighted in the growth of the direct-to-consumer market, so we know there is demand.
Many employers offer a suite of flexible benefits including protection, and I would encourage them to use creative ways to present these products to their employees, given they are in a strong position where they have the most information on their colleagues and will know and individuals move through life stages that will require protection.
FTA: What are the risks faced if a client doesn't have effective protection policies in place?
RSL: In the event of critical illness or long-term sickness, the client could find themselves exhausting their emergency funds and dipping into savings.
In the event of death, if there is no life cover in place there could be a big challenge for the surviving spouse or family members as they may find it hard to be financially resilient when it comes to paying a mortgage, loans or car finance, as well as maintaining a general standard of living.
