Bridge generation gap to grow advice business

DomaCom chief executive Arthur Naoumidis.


By Elizabeth Somerville

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Financial planners should address the needs of every generation in a family when developing wealth management strategies, one investment specialist has recommended.

“From a financial planning perspective, we believe the planner should look at the whole family, not just one generation,” DomaCom chief executive Arthur Naoumidis told financialobserver, adding planners needed to engage with generation Y now, instead of waiting until they had substantial assets.

“If you don’t engage [with generation Y] now, when they start getting sizeable assets they will already have a [financial planning] relationship with someone else.”

Members of generation Y were ideal clients to invest in fractional investment property funds, where people invested in a percentage of a residential property without having to acquire the whole asset, Naoumidis said.

These fractional property investments then released equity to the original homeowner, often a retiree, which could assist in funding aged-care needs.

“Fractional property investment funds can be used by generation Y to invest in equity release in property,” Naoumidis said.

“It’s a good way to invest in property in the suburb they want to live, and it could include [investing in] their grandparents’ place.”

The older generation could use that release of equity as a tool to support their lifestyle during retirement, or as an option to financially assist their children in achieving their goals as well as supporting their generation Y grandchildren in getting into the property market, he said.

“What we’re about is creating long-term funding solutions to meet aged-care needs, which includes things like lifestyle,” he said.

“[Older] people who have acquired all these assets want to help the next generation and now they can engage in next generation wealth planning.”

A dozen dealer groups with about 500 advisers used DomaCom’s fractional property investment tool and another 27 dealer groups were in the process of reviewing it, he said.

The product would be supported by the launch early next year of DomaCom’s equity release tool, which would further assist in intergenerational planning needs.

Naoumidis presented on the above topics at financialobserver’s Aged Care Summit in the past week.

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