Financial advice clients are put off doing proper estate planning because they want to retain control over their assets and prevent themselves running out of money, new research has suggested.
The survey, of more than 550 financial advisers by Octopus Investments and advice directory VouchedFor, asked respondents to describe clients’ biggest barriers when doing estate planning.
A majority of advisers (57%) said that clients ‘don’t see the urgency’, but 55% said clients ‘don’t want to lose access to their assets’. A further 33% said clients did not want to think about their own death, while 25% of respondents said clients ‘don’t know they should be doing it’.
Use of business property relief (BPR) as a solution is set to become more popular, Octopus has said, as advisers seek to reassure their clients about control over assets. Once BPR-qualifying shares have been held for more than two years, they can be passed on free from inheritance tax when the shareholder eventually passes away.
‘It’s easy to get tied up in discussions about asset prices and cash flow modelling, which are clearly important, but this kind of planning is really about the kind of life you want to live and leaving a legacy for your family,’ said Octopus managing director Paul Latham.
‘The flexibility offered by BPR investments has become a crucial part of estate planning, a trend we expect to continue. Some investors also like the fact their money is helping to stimulate the UK economy by backing smaller companies or financing sustainable projects, such as solar farms.’
Jane Finnerty, joint chair at the Society of Later Life Advisers, added that people tend to underestimate how long they will live. The average life expectancy of a woman aged 65 in the UK is now 86, according to the Office for National Statistics.
‘People are often anxious about gifting too early and tend to delay planning in later life as everyone tends to underestimate how long they might live and worry if their money will last,’ Finnerty said.
‘With the right advice from a financial adviser that understands the issues of longevity and the financial hurdles that typically lie ahead, clients can ensure that their plans fit not only what they want but can also be regularly reviewed and adapted throughout their later life.’
To discuss estate planning with an adviser, contact us on 0191 384 1008.