There has been much talk of late surrounding the inter-generational wealth transfer, and of baby boomers passing on their considerable wealth in the next 10 – 20 years.
This presents a significant opportunity for advisers to become an incredibly important part of the landscape for Australians as these events starts to occur.
It also, however, presents advisers with a huge challenge for their business, as at present Australia’s budgeting skills leave a lot to be desired. We are talking about a huge number of people who will be coming into an inheritance, or being involved in a wealth transfer, that have very low levels of financial literacy, and a lifetime of bad habits with money.
One of the biggest jobs for advisers to get ready for (and beware of) is the task of teaching their clients cashflow management and budgeting. Now, many of you may say that you already do that. But does your process allow for meaningful, ongoing commentary into the way clients are managing their budgets? I know my adviser has set a budget in conjunction with us, but he certainly does not have the capacity to monitor on a monthly basis if we are sticking to it.
This is where tools like Moneysoft can be very useful for an adviser’s practice. Unless clients’ cashflow and budgeting needs are automated and software driven, there will be millions of Australians getting large sums of money, and while some may pay off their mortgage, we are also likely to see a large sum frittered away without good money management skills.
While a traditional adviser’s business revolves around insurance, investment advice, and even goals-based advice, I believe the next generation of clients’ biggest needs will be around cashflow management and budgeting.
If you think it’s hard to make money from this service (and let’s face it, we all need to make money or we won’t stay in business very long) then you need to rethink how you will undertake this task in your practice into the future.
Because if you are not ready for it, it’s going to cause a lot of angst, wasted time and ultimately clients who will still rely on the pension system as they have not given themselves the opportunity to explore other options.
The good news is that advisers are probably the most significant part of the community that can make a real difference to Australians in this part of their lives. You have a chance to become an integral part of the family dynamic through the true, trusted adviser relationship.
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