Wealth Managers Need To Adapt To Changing Demographics In The UK
John Doidge of the Geneva Management Group
The UK government has conducted numerous research projects into what has been described as "the most dramatic demographic change facing the world today": global ageing.
It projects that by 2037 in the UK more than 1.4 million more households will be headed by a person aged 85 or older.
This trend, which has huge implications for the country and for government planners, represents a dramatically different population demographic compared to any period in the past.
This trend is coupled with lower birth rates and the potential for a decrease in population numbers, as younger people choose to leave the country because of Brexit.
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Various industries will be impacted by this change in the British population, and the wealth management sector is one that should be planning for the changes it may face.
It is likely that family offices will find themselves dealing with more generations of one family. This could involve up to four generations - the founders of the wealth (in their 90s), their children (aged 70+), their grandchildren who would be in their 40s or 50s, and great-grandchildren who may be young adults or teenagers.
Passing down the generations
The challenge for the wealth adviser will be to convince the first generation to make wealth available to the other generations during their lifetimes, and not just to look at bequeathing it to the other generations on death, as has traditionally been the case.
In a similar vein, the family office will have a role to play in structuring the family's wealth so that it is accessible without there being any opportunity for other generations to waste it.
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A major focus will be on arranging the family's affairs so that needs can be met, while still ensuring that wealth will be both preserved and grow.
No doubt, in some cases this will require significant personal skills to ward off the attempts by younger members of the family to secure more of the capital for themselves.
Structuring will also have to be done around the factors that usually apply, such as the avoidance of taxes like inheritance tax.
While this is the role of a family office, new approaches will be necessary so that the taxes can be kept at bay, while the family will still be able to access the wealth.
Medical checks
Wealth managers are also likely to have a far bigger administrative function.
One negative consequence of the medical advances resulting in longer lifespans is that people will live longer with conditions typical of age: dementia, diabetes, cardiac problems and so on.
Many will no longer be able to manage their affairs and so the family office will quite possibly be called on to deal with the management of day-to-day affairs - things such as arranging medical tests, ensuring that medication is delivered, paying medical bills and bills for carers.
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