Legacy planning takes on a unique significance for individuals at different stages of life, according to Finextra Wealth financial adviser Heath Hebenton.
“[Advisers are] here to help clients navigate that path,” he said, acknowledging clients’ reluctance to complete paperwork. We approach that conversation right from our first meeting with a client.”
Speaking at the launch of a Generation Life research paper, Reimagining Legacy, Hebenton added that in any discussion about legacy, the focus quickly shifts to the heart of the matter: the client’s motivation.
“We ask how motivated are [clients] to actually leave a legacy,” he said, indicating the firm specifically gauges whether leaving money to charities is a specific goal.
He said he was not surprised by the findings of the Generation Life paper, which concluded that while more than 80 per cent of high net worth Australians say they intend to have a legacy, only one in five have a plan to do so.
The report found that one in three Australians believe superannuation is the best way to optimise wealth and leave a legacy, despite this not fitting the government’s proposed purpose of super .
It also found that most people (49 per cent) rely on wills. Additionally, some individuals (34 per cent) view superannuation as a vehicle to leave a legacy, which further indicates that there is a knowledge gap.
“There are approximately 50 per cent of people in New South Wales who lack a valid estate plan,” Hebenton said, highlighting a significant gap in legacy preparation.
He added that several advice firms have taken steps to bring legacy planning in-house to bridge the gap, collaborating with estate planning experts and integrating legacy discussions into their financial advisory services.
Hebenton highlighted the fact that the transfer of intergenerational wealth from Baby Boomers to Gen X, Millennials, and Gen Y is here and is accelerating .
A report released by wholesale broker AUSIEX in July indicated that financial advisers should prepare for this.
A Financial Planning Standards Board global research report into the value of financial planning – released this week – said that the Generation Y individuals are open to financial planning, with two-thirds of those who do not have a financial planner considering paying for advice.
The report said they prioritise mental health, family life, and work satisfaction in their financial planning. They prefer face-to-face meetings but also use digital finance tools.
They expect to receive significant intergenerational wealth and show interest in direct investing, socially responsible investments, online portals for financial planning, and cryptocurrency investments.
Beyond dollars
Hebenton said most people who are not professionally advised are unaware of the tax implications of their superannuation funds.
“Most of them would just get their annual statement and have a look if their funds are up or down,” he said.
This lack of awareness could have significant financial consequences for beneficiaries, making tax planning crucial.
Hebenton identified the value of incorporating lifetime annuities into legacy planning. He described a case where a client increased their annual income by $10,000 by reallocating assets into a lifetime income product.
“He’s not going to suddenly sell the family home and downsize,” Hebenton added, emphasising that legacy planning is not just about leaving a financial sum but also ensuring a certain quality of life for oneself and loved ones.
