Intergenerational wealth transfer will become an increasingly important part of the advice and planning process, the head of Standard Life’s Wrap platform has predicted.
While the area is reasonably “young” in the UK, market advisers have suggested it is a growing trend.
Currently, the most common question clients are asking advisers is whether they will be able to retire early. More than half (58 per cent) of clients wanted to know how much money they would need to retire early, according to research by Standard Life.
The company’s bi-annual survey of UK financial advisers showed clients are also keen to discover if they should take tax-free cash as a lump sum, with 48 per cent asking advisers about this.
Other questions raised in the survey included how to pay less tax (38 per cent), the impact of Brexit on finances (36 per cent), transferring defined benefit pensions (22 per cent) and buying an annuity (16 per cent).
Meanwhile, gifting to children and grandchildren in a tax-efficient way during their lifetime and after death scored 9 per cent and 14 per cent respectively.
Standard Life head of Wrap platform proposition Alastair Black said there has been a “fundamental shift” in adviser models with the introduction of pension freedoms.
He says: “People need confidence they will not run out of money in retirement, which is why there is a greater need for advisers. But the next thing clients are starting to think about is ‘what happens when I go?’. That is leading to more discussions about transferring wealth.”
Responding to the results of Standard Life’s survey of 287 advisers, which took place between 19 November and 2 December 2019, he said: “Clients close to retirement want to make the most of their hard-earned savings, so it’s unsurprising to see questions on early retirement and lump sums asked most frequently.
“This demonstrates the true value of good advice, as these are basic questions that can have a huge impact on retirement planning.”
He adds: “An interesting dimension we are seeing in the research is the healthy proportion of clients seeking advice on inheritance tax and gifting to children and grandchildren. Advisers are telling us this is a growing trend as more clients have larger amounts of money to manage.”
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