These disparities can, of course, lead to difficult conversations when different generations discuss money, says Intergenerational England.
Around a third of boomers are “reluctant” to pass on their wealth to children or grandchildren because they do not share the same values, claims research by Abrdn.
Parents are often reticent about discussing the extent of their wealth with their children. There is also a reluctance to embrace the responsibility. Only 42 per cent of adults expecting an inheritance, and just 21 per cent of those in Gen Z, “feel very comfortable financially handling the new wealth”, according to a survey by New York Life, a US insurance company.
And it is not just economic sensitivities at play, but emotional ones. Younger family members can find it distressing to have frank discussions with parents envisaging their deaths. They may experience guilt or shame, their self-worth negatively impacted by being so easily set up for life.
Blended families can throw in additional emotive factors. And of course there is always the perennial, natural rebellious attraction to do things differently from mum and dad.
According to research by Deloitte, 90 per cent of heirs mark receipt of their inheritance by summarily ditching their parents’ financial adviser – a startling statistic currently prompting thousands of financial services professionals into scrabbling to involve younger family members in their client conversations.
But how did we get here anyway? Why have boomers become the most affluent generation in history – and why is this a challenge right now?
There is an obvious standout reason parents/grandparents’ wealth has exponentially exploded. In the 20 years to 2016, house prices soared nearly 300 per cent. Around 70 per cent of the great wealth being transferred will be property.
Compounding this, more than a decade of low interest rates boosted the value of final salary pensions. And an increase in life expectancy over the past four decades – from 82 to 85 for women and from 78 to 83 for men – means the boomers’ assets are growing for longer.
But not for much longer. History’s longest-lived generation is coming to an end. The UK death rate is increasing – 7 per cent between 2017 and 2027, projects the Office for National Statistics.
This, says a study by the Centre for Economics and Business Research, will drive up the annual number of Britons receiving an inheritance by 14 per cent, to 1.1mn. By 2054 that figure will be 1.5mn.
There are ways families can work together to protect their assets into the next generation and beyond. Gifting could avoid inheritance tax, provided the donor lives for at least another seven years. Parents/grandparents can put their bequest into property or other investments in their heirs’ names.
