International advisers say that the three main barriers to recommending trusts are that clients see them as too complicated, they don’t offer enough control, and that clients may want the capital later in life according to research by Quilter-owned Old Mutual International.
Some 28% of advisers say that their clients avoid trusts because they are too complicated and that they don’t understand them.
A quarter of advisers believe that clients avoid trusts because they don’t offer enough control given that when assets are placed in trust, legal ownership passes to the trustees who then have responsibility for managing and distributing the trust fund to the beneficiaries.
Some 17% of advisers say that clients avoid trusts because they don’t know how much capital they will need in later life. Quilter suggests that this may well be the result of increases in life expectancy and uncertainty over care costs.
Rachael Griffin, head of trusts and technical solutions at Quilter, says: “A record £5.2bn was collected in IHT receipts by HMRC in 2017/18, which is a 67% jump in five years. Through good financial planning and the use of trusts, it is possible to mitigate the impact of IHT. Modern trusts are about transparency, fairness and simplicity. They ensure the right people receive the right amount of money at the right time, something which has become even more important in today’s complex family structures.
“While this research highlights the potential concerns of clients, these can all be mitigated through greater understanding and knowledge of the full range of trust solutions now available. Trusts remain a cornerstone of financial planning and are a great way for advisers to demonstrate the value of their advice to their clients.”
The Old Mutual International adviser survey took place in June 2018 with 180 respondents from across the UK, Europe, Middle East and Asia.
