Estate planning is a vital part of a client’s finances but not all are keen on talking to their adviser about inheritance.
Octopus Investments polled more than 550 UK financial advisers for its recent report and 57% said clients lack of urgency is preventing people from tackling inheritance plans with their adviser.
Just over half (55%) said that clients do not want to lose their assets.
Some 25% said clients do not know they should be doing it, while a third (33%) said clients do not want to think about their own death.
Next massive growth area
“Inheritance tax planning is the next massive growth area for financial advice,” David Inglesfield, chief executive of IFA firm Independent Wealth Partners, told International Adviser.
“We are entering a period when, for the first time in history, large numbers of people who would not consider themselves ‘wealthy’ will leave money to the next generation.
“The challenge is for advisers to be comfortable and competent to make later life and inter-generational planning a core part of holistic advice.
“This requires appropriate qualifications – such as Solla (the Society of Later Life Advisers) and the Step trust and estates diploma – as well as a genuinely client-centred approach.”
Taking on assets
The survey also found three quarters (76%) of advisers have advised on new assets to help grow their business.
This might be from taking on new clients in the family, as 82% said they involve beneficiaries in estate planning conversations.
With £5.5trn ($7.1trn, €6.5trn) expected to be passed between the generations by 2047, it is also a growing area for advisers.
Almost half (48%) said they were doing more estate planning compared to five years ago, while only 6% said they were doing less.
Money worries
Octopus’ survey also found 89% of advisers believe clients have become more mindful of needing access to their money later in life, as expected lifespans and care costs continue to rise.
“The fact people are living longer is naturally cause for celebration, but an elongated life does bring with it some difficult questions to answer.” said Rachael Griffin, financial planning and tax expert at Quilter.
“A financial adviser can help a client answer these questions, but it is worth bringing the rest of the family into the conversation too.
“Doing so, will not only help put the older generation’s mind at ease as their financial future is accounted for, but also help the younger generations better understand what they can expect to inherit and plan their finances accordingly.”
Keith Richards, chief executive of the Personal Finance Society, said to IA: “A second opinion from an expert professional is a must. As when facing a serious legal issue, one would consult a lawyer, the same consideration should apply to when making impactful financial decisions.
“The stakes faced by the saver are too high for retirees to be gambling with their savings, and it is never too early to seek professional financial advice. As it stands, one-in-five people are expected to live passed the age of 100, so the benefit of expert professional advice cannot be overestimated.”
Estate planning solutions
Neil Jones, tax and estate planning specialist, Canada Life, said: “This research not only highlights one of the barriers for people to seek advice, but also shows how easily advisers can add value.
“Advisers have a range of solutions available including trusts, business relief schemes and protection policies, which are all able to help mitigate inheritance tax and provide control.
“Whilst business relief can be valuable in certain circumstances, putting in place a trust can provide control over how and when beneficiaries receive money, both before and after the settlor’s death.
“Trusts can also provide flexible access for the settlor, without introducing higher levels of risk, and can easily be used to plan wealth transfers between generations and shelter wealth during divorce or bankruptcy.
“Without accessing advice, most consumers will simply stick to often pre-conceived ideas about tax and estate planning, without the knowledge to take full advantage of the range of solutions available.”
For your estate planning needs and queries, you may consult an estate planning attorney today.
