By Anoushka Kenley and Nicole Sykes

The financial sector is bracing for the ‘Great Wealth Transfer’, where an estimated £5.5 trillion is expected to be passed down to younger generations over the next 20 to 30 years. The implications of this for financial advisers are profound, as the next generation of wealthy individuals is markedly different from their predecessors. Financial advisers and firms seeking to attract the business of the around 200,000 under-35s who already possess net financial assets exceeding £100,000 will need to adapt.

One way for financial advisers to attract this new generation of wealth is to tap into their philanthropic instincts – because this is the generous generation. Nearly all wealthy young people surveyed – those with net financial assets (excluding all property wealth, physical wealth and workplace pensions) exceeding £100,000 - express a strong desire to have a positive societal impact with their money, and 88% of them were already donating to charity. And not only are more of them giving to charity than in other generations, but they are giving more. 38% of under-35s contributed more than £2,000 annually – a figure eight times higher than their over-55 counterparts.

Despite the financial pressures from goals such as paying off mortgages or starting businesses, and even despite inflation’s pressures, younger wealthy individuals prioritise charitable giving.

This generation is also significantly more likely to seek financial advice, with 78% having already done so through various channels, compared to 61% of those over 55. But there are nevertheless around 100,000 wealthy people under 35 who may not have a relationship with a financial or wealth advisor at present. That is a significant market to tap into.

Financial advisers have a significant opportunity to engage this demographic by integrating philanthropy into their services. More than half of wealthy under-35s indicated they would be more likely to choose a financial adviser who offers philanthropy advice.

Aware of the potential that this presents to the UK financial sector, the UK government and the Financial Conduct Authority have been working with a coalition of accredited bodies and philanthropy experts to encourage more philanthropy education and training. There is every indication that these efforts will continue, if not gain pace, with an ambitious new government in place who may be looking to make a dent in pressing societal issues that philanthropy can make a difference to.

As such, financial advisers have a double opportunity. By providing younger wealthy people with tailored advice on charitable giving, impact investment, and ethical funds, they will find not only a path to differentiation but get ahead of government action too. In doing so, they will also discover a means to secure the loyalty and trust of a new generation of clients.

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