Inheritance dissatisfaction an advice opportunity: Report

Most high-net-worth (HNW) inheritors are unhappy with how they have used their inherited capital, presenting an opportunity for financial advisers.

As the $3.5 trillion great wealth transfer kicks off, Capital Group surveyed 600 HNW individuals across Europe, Asia Pacific, and the US to explore the use of inheritances and succession planning.

The research highlights that inherited money often sits dormant or underutilised.

On average, only 22% of inherited capital is invested in mutual funds and 11% in a pension fund.

In Australia, wealth holders invest even less (29%) of their inheritances than their global peers (33%).

As a result, 65% of Gen X and Millennial inheritors said they have regrets about how they have used their inheritance money, with nearly two in five wishing they had invested more.

Still, just 20% engaged a financial adviser.

"Our study reveals that most wealth holders wish they had used their inheritance differently and invested more," Capital Group president Europe and Asia client Guy Henriques said.

"We believe that by considering investing some of their newly acquired capital, HNW individuals could achieve long-term wealth generation."

Other ways in which Australians differed from the rest of the world included the fact that just 40% inherit directly from their grandparents, compared to almost half (47%) around the world.

Australians tend to be more hands-off in passing on assets as up to 92% leave no specific wish on how inheritance must be used, while only 79% around the world have done so.

Henriques said given the larger capital the younger generation is receiving, it would be beneficial for them to use a financial adviser to better utilise their inheritance.

"Trillions of dollars are estimated to be transferred from Baby Boomers across the US, Europe, and developed Asia to younger generations in coming decades," Henriques said.

"Millennials and Generation Z are receiving larger inheritances at a younger age and could benefit from a financial adviser's market insights and long-term investment perspective."