A significant majority of independent financial advisers (IFAs) are failing to capitalise on the area of estate planning as they feel it is “too technical” and “a taboo subject.”

The new research from Co-op Legal services identified legal estate planning as a growth opportunity for IFAs.  As many as three quarters (75%) of IFAs believe that providing advice on wills and other legal estate planning would improve client satisfaction.

Over half believe it would make it easier to retain customers and more than two thirds (67%) said it would increase the number of recommendations they receive via existing clients.

However, as few as one in 10 clients are prompted by their financial adviser to make a will, despite almost all IFAs agreeing that clients are ill-informed or have poor understanding about what happens to their wealth when they die.

The research also revealed the scale of the unmet need – and the size of the opportunity. It found that as many as three quarters (73%) of people have not made a will and only half (53%) of married couples or those in a civil partnership have written one.

At the same time, the current Covid-19 pandemic appears to be driving demand for will writing advice and support, with Co-op reporting that sales have increased by multiples in recent weeks.

However, the research shows that people are confused about where to turn for advice, with almost a quarter (24%) having no idea who to go to – and only one in 10 (15%) considering their IFA.

Carilion Hurley, managing director of Co-op Legal Services said: “Talking about inheritance isn’t easy. However, done in the right way, with information and insight brought by the right technology tools and technical knowledge, estate planning presents a real opportunity for IFAs to add value for existing clients and drive referrals. IFAs work hard to help clients with financial wellbeing, having legal affairs in order is an underpin to financial wellbeing and intergenerational wealth transfer.”

Expert view

Ian Dyall, head of estate planning at Tilney says that it is important for people to bring forward their estate planning.

“You may have not felt the need to gift before, as your children were doing well financially with secure jobs or businesses, but the current situation has turned that financial security on its head for many, and parents are starting to re-evaluate whether they can afford to help. Now is a time when people should be considering whether they should start making gifts, and if so how.”

Gifting

Dyall identifies several ways in which people can leave an inheritance of some kind to their loved ones – either by making an outright gift or a gift into a trust.

“While an outright gift has the benefit of being simple, a discretionary trust can be beneficial in protecting the assets (e.g. from divorce or bankruptcy), ensuring that those assets don’t damage any benefits that the intended beneficiary may be on and ensuring that the gift does not create an IHT liability for the beneficiary.  Trusts are also useful if the donor wishes to provide for several different beneficiaries where the financial needs of those beneficiaries are not yet clear, which is valuable in such an uncertain and changing landscape.  In effect, this creates an “emergency fund” that different children or grandchildren can benefit from if and when needed,” adds Dyall.

 

Further Reading

Revealed: What your clients want you to write about

MPs press for radical changes to inheritance tax

Grandparents still a fan of the grand gesture