What you wish you knew before spending your inheritance?

An inheritance is often a moment of mixed emotions. It represents a significant financial event, but it is also a legacy from someone you cared for. This gift comes with a profound sense of emotional and financial responsibility. While, in some cases, it can feel like a life-changing opportunity, a survey by Capital Group reveals a less optimistic picture: a staggering 60% of those who have inherited wealth regret how they handled it. This widespread sentiment of dissatisfaction is a stark reminder that managing a sudden financial windfall, especially one rooted in such a personal loss, is more complex than it seems.

The Finfluencer trap and under-utilised funds

In today's digital age, it's easy to get lost in a sea of social media “finfluencers” promising quick and easy investment tips. The study revealed that a larger number of millennials turn to these online personalities for advice than to professional financial advisers, 27% versus 18%. While it might be tempting to get your advice from a flashy online personality, a costly mistake could be the result.

It’s not just bad advice causing the problems. A large portion of inherited capital is simply sitting still. The research showed that only 22% of inherited funds are invested in securities or mutual funds, and a mere 11% are put into a pension fund. This inertia means the money isn't working for you. In fact, due to inflation, it might even be losing value. It's no wonder that a third of inheritors wish they had invested more.

The UK's wealth transfer is underway

The UK is on the cusp of an unprecedented generational wealth transfer, with an estimated £5 trillion in assets set to be passed down over the next two decades. This monumental transfer presents an incredible opportunity, but as the survey data shows, many people are unprepared to navigate it alone.

While many people rely on lawyers and accountants to handle the initial succession process, these professionals may not be the best source for long-term investment advice. The survey found that while three out of five people used lawyers and almost half used accountants, only 15% consulted a financial advisor. However, the benefits of professional guidance are clear: 78% of those in the UK who did seek advice felt better informed about managing their new wealth.

Working with a qualified financial adviser can help you make the most of an inheritance. They can provide a personalised roadmap for long-term growth, tax efficiency, and helping you to shape and achieve your financial goals.

Turning your inheritance into a lasting legacy

The lesson from this research is clear: to avoid future regrets, seeking professional financial advice is essential. This ensures that the wealth you've received is not only protected but positioned for sustainable growth. Don't let your inheritance sit idle. With the right strategy, you can transform what could be a significant gift into a lasting legacy.  

Note: The findings were from a survey of 600 high net worth individuals across Europe, Asia Pacific and the US by investment manager Capital Group. 

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This article is intended for general information only, it does not constitute individual advice and should not be used to inform financial decisions.

The Financial Conduct Authority (FCA) does not regulate estate planning, tax or trust advice. 

Investment returns are not guaranteed, and you may get back less than you originally invested. Past performance is not a guide to future returns.