For high net-worth individuals (HNWIs), everything must be in order and plans must be in place so that there is a clear strategy for all finances. However, passing on wealth is something that requires some key considerations.

Changes to demographics, along with social and economic developments, means there are external as well as internal challenges to consider. In order to uncover how HNWIs are tackling these challenges, independent wealth management firm, Saunderson House, conducted a survey. Here, 100 HNWIs – some still working while others were retired – were questioned across 16 interviews, revealing the factors that play a part in transferring wealth.

Here is a look at what the survey revealed these factors to be, as well as the main concerns that surround this particular area of wealth management.

Timing Concerns

Knowing how much to pass on and when is one of the main concerns for HNWIs. There is no set time to pass on wealth, and this lack of guidance and rules about when to do it seems to be a major point of contention for HNWIs trying to plan ahead. They want to make sure they are making this move in a meaningful way; therefore, when they pass it on or start the conversation around when they do this,

Survey respondents believe that when they are in the 55 to 64-year-old age bracket, they are at a point in their lives when they feel they ought to discuss their plans for passing on their wealth.

But it was the age of their beneficiaries that seemed to hold more importance. HNWIs want to ensure their beneficiaries remain ambitious in their career, and keeping them motivated could mean holding off discussing when and how they’d receive wealth.

Communication Issues

Money is a sensitive subject. Financial concerns have long been taboo, and this reticence to divulge is apparent in the way HNWIs approach the topic with their loved ones.

While HNWIs know they need to talk to their children and grandchildren about passing on wealth, they find it uncomfortable, with both financial advisers and partners often knowing more about their plans than their own family.

Political Factors

As well as internal factors, such as personal relationships playing a part, there are also external issues that can influence HNWIs’ decision making. One of these key concerns is who is in government, with a change in government being the greatest worry. These concerns make sense as higher taxes can impact significantly on all aspects of wealth.  

Transferring wealth at a time of political stability is, therefore, considered desirable. This means it is less likely that there will be unpredictable shifts.

The Main Recommendations

The report has led to Saunderson House making five key recommendations for HNWIs thinking of transferring their wealth now or in the future:

  1. Consider the reasons for your wealth transfer – What are your goals if you intend to transfer your wealth? Knowing these, as well as when and how you want to do this to make the biggest impact, can be hugely beneficial.
  2. Get talking – It might be awkward but try to start the conversation as soon as you’re ready. Let beneficiaries know what your goals are and what you have in mind.
  3. Establish a family board – Once you’ve started the conversations, you might be open to creating a group of family members to help with the decision-making process.
  4. Be certain – Build certainty by adding long-term cash flow forecasting tools to plot out your financial position.
  5. Add protection – Plan ahead for the unexpected as much as possible.

For more information, you will find the full report here.