Managing family wealth can be considerably more complicated than managing an investment portfolio for one person. You may be investing for your own retirement while also paying school or university fees, helping children onto the property ladder, supporting elderly parents and thinking about how wealth will eventually pass to the next generation.
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How To Choose The Best Wealth Managers For Families
The best wealth managers for families should therefore look at your family’s finances as a whole rather than simply focusing on investment performance.
Look for family financial planning
Start by considering whether the wealth manager offers comprehensive financial planning alongside investment management.
A good adviser should establish what your family is trying to achieve over the next five, ten or even 30 years. This could include retirement, education costs, property purchases, helping children financially or providing an inheritance.
Cash-flow modelling can be particularly useful because it can show how these different commitments could affect your finances over time.
Consider different generations
Different members of a family are likely to have very different investment requirements.
Parents may be building towards retirement, grandparents may be considering inheritance planning and younger family members could be investing with a time horizon of several decades.
Look for a wealth manager capable of providing appropriate investment strategies for different generations while maintaining an overview of the family’s overall financial position.
Plan how wealth will pass to your children
For wealthier families, inheritance and estate planning can become an important part of wealth management.
The UK’s standard Inheritance Tax rate is currently 40% on the portion of an estate above the available thresholds, although exemptions and reliefs can significantly affect what is ultimately payable.
A wealth manager can help you consider when and how you might transfer wealth to children or grandchildren and should be able to work alongside your accountant and solicitor where specialist tax or legal advice is required.
Consider gifting during your lifetime
Passing money to the next generation doesn’t necessarily have to wait until you die.
You might want to help children with house deposits, school or university costs or provide financial support as they start families of their own.
There are specific Inheritance Tax rules and exemptions relating to gifts. For example, individuals currently have a £3,000 annual gifting exemption, while certain regular gifts made from surplus income can also fall outside an estate for Inheritance Tax purposes. Larger outright gifts may potentially fall outside the estate if you survive for seven years after making them.
A good wealth manager should incorporate gifting into your wider financial plan rather than looking at it purely as a tax-saving exercise. You need to make sure you retain enough money for your own future first.
Understand trusts
For some families, trusts can provide a useful way of holding and eventually transferring assets.
However, trusts can be complicated and can themselves be subject to Inheritance Tax when assets enter the trust, at ten-year anniversaries or when assets leave it.
Look for a wealth manager with experience managing investments held within trusts and working alongside solicitors and tax advisers rather than assuming that establishing a trust automatically reduces your tax bill.
Review pensions and estate planning
Pensions should also form part of the family’s overall wealth plan.
This is particularly important because the rules are changing. From 6 April 2027, most unused pension funds and pension death benefits are due to be included within an individual’s estate for Inheritance Tax purposes.
Families with substantial pension assets may therefore want their wealth manager to review their retirement, investment and estate strategies together rather than treating pensions separately.
Get the family involved
A good family wealth manager should also be capable of building relationships with the next generation.
This could mean introducing adult children to the adviser, helping them understand investments or gradually involving them in discussions about family wealth.
This can be particularly valuable where significant assets are eventually likely to pass from one generation to another.
Look beyond investment returns
Finally, don’t judge a family wealth manager purely on investment performance.
Fees, service, tax planning, financial planning, investment expertise and the ability to work with your family’s other professional advisers can all be important.
The best wealth manager for families should ultimately help answer a broader question than “How should we invest our money?”
They should help you decide “How can we use, protect and eventually pass on our wealth to benefit our family across generations?”