As we approach the Autumn Budget on 22 November, our thoughts turn to taxation. While, for most people, the Budget is nowhere near as exciting as the other big upcoming event that is Christmas, it does have the potential to provide advisers with the gift of opportunities to engage with clients and demonstrate their value.
At times of tax change, most people take notice of the big headlines. In a lot of cases, however, it is the smaller stories that can yield the strongest and most important impetus for action.
It is all about attention to detail, you see. Attention to the kind of detail that means something to clients. The kind of detail that, used carefully and with added insight, might just make the difference between a client doing business with you and choosing someone else.
Do not ever underestimate the power of regular and consistent “I saw this and thought of you” communication. What do I mean by that?
- Seeing a tax change, development or story.
- Recognising the type of clients for whom it has relevance.
- Thinking about what action would improve the financial wellbeing of the clients.
- Articulating the change/development and the resulting opportunity.
- Communicating it to the clients to whom it might mean something.
These five simple steps can be applied to change throughout the year, not just at Budget time.
We apply a “so what?” process to tax change. Consider the change and ask “so what?” from the standpoint of a client. If what you come up with would not resonate with and be understood by a client, then ask “so what?” again. Keep on doing it until you get an answer that does resonate. Be relentless in this.
If you do not get to an outcome you believe would resonate with the client, then the tax change should be classified as of secondary importance rather than primary.
Also consider the “which means that…” process. You should be looking to have a clear and non-technical statement for a client as a response to that challenge. Take the following example:
Statement of fact: The dividend allowance is falling from £5,000 to £2,000 from 6 April.
So what? This means less tax-free dividends will be possible for most people for next year.
So what? Capital invested in collectives producing dividends that in total (assuming the investor has no other dividends in the year) do not exceed £2,000 will probably be a tax-free investment.
So what? For money invested outside of pensions and Isa wrappers, consider unwrapped collectives for investments up to an amount likely to produce dividends within the allowance, and consider the tax deferment qualities of an investment bond for investments beyond this amount.
Simplistic? Possibly. Patronising? Maybe. But there is a grain of common sense in these approaches, too. At a time of tax change, especially around the Budget, applying a “so what?” or “which means that…” filter is important in order to get to the heart of any impact and recommended action.
Tony Wickenden is joint managing director of Technical Connection. You can find him Tweeting @tecconn