View more on these topics

Silver service

Tax planning ideas are communicated most effectively when they are targeted at the group for whom the ideas are most likely to be relevant. Obvious, really, isn&#39t it?

Client segmentation is something which advisers should be doing on a regular basis to ensure they secure the best payback on their investment of time and funds in constructing the tax planning strategy in question.

When considering those clients for whom their tax planning messages are relevant, advisers will no doubt pay greatest attention to client segments that are reasonably wide and for which a strategy is likely to be of importance, responds to an immediate and pressing need, is capable of relatively easy explanation and implementation and is relatively low risk.

In considering the first of these criteria, it will be well worthwhile considering the flurry of activity in the press over the past few weeks on affluent over-50s. It does not take much thinking time to recognise that this group is anything but a micro-specialist group. On the contrary.

You only have to consider the facts and you will quickly recognise the importance of this segment.

Over-50s account for 44 per cent (yes, 44 per cent) of the UK population – some segment. They also account for 40 per cent of UK consumer spending and 80 per cent of national wealth. Is this enough to get you excited? It should be.

The chances are, if you are reading this article, you could well be one of this group. However, it seems that very little consumer marketing properly targets this group. Added to the fact that the over-50s are apparently much more difficult to persuade, this must mean that opportunities are being missed. And this must apply to financial and tax planning as well as the marketing of consumer goods.

What tax planning strategies are likely to appeal to this group and why? Well, anything to do with pre-retirement and at-retirement planning is likely to be relevant. Immediately, you will appreciate the need to subdivide your generic over-50s into those who have not yet retired, those almost at retirement and those in retirement.

Many over-50s will have children at university, some will already have grandchildren and those who do not may be expecting them in the not too distant future.

For those not too financially preoccupied with funding for their own retirement, setting up a tax-effective fund to pay for the higher education fund of their grandchildren or future grandchildren may appeal. Advice will be essential to ensure that the right tax wrappers are chosen, maximum use is made, where appropriate, of the child trust fund (available from April 2005 for those born on or after September 1, 2002) and the desired levels of control and flexibility are secured.

For those clients who run their own businesses, minimising tax on funds extracted from the business – taking account, where appropriate, of the new 19 per cent minimum rate of corporation tax on dividends paid to individual shareholders – will be a highly valued service. Advice in this area should be integrated with advice on relevant planning, especially for owner-managers who are over 50.

For those slightly older over-50s, there is estate planning to consider. The recent introduction of an income tax charge on continued use of pre-owned assets for which a full commercial charge is not made and which are not caught by the gift with reservation provisions has further cut back the opportunities for reducing the liability to inheritance tax through planning carried out during one&#39s lifetime. This is especially so in respect of real property and chattels.

It would seem that slightly more scope exists in respect of intangible property, such as insurance policies. It would appear that many of the capital investment-based inheritance tax plans will not be caught by the new rules.

In particular, what are often known as discounted gift schemes would seem to survive on the basis that the benefits carved out and kept are not to be treated as settled property for the purposes of the legislation.

Retirement planning, planning for higher education and estate planning are just three key areas of planning for the over-50s where making the right choice is essential to achieving one&#39s objectives.

As I have said many times before, when choice exists, when the choices are relatively difficult and where the consequences of making the wrong or right choices are significant, the role of advice and the opportunity for advisers to add value is considerable.


Richard Verdin on Protection

It has been quite a while since I read an insurance company&#39s terms of business agreement but, as one landed on a desk near me recently, I thought I would read it to try to understand why changes were needed to the previous agreement. It turned out that the changes were necessary to accommodate ebusiness, […]

Crawshaw takes B&B into multi-tie arena

Bradford & Bingley is ending its IFA status and moving towards multi-ties in a major reversal of strategy following a wide-ranging review led by new group chief executive Steven Crawshaw. Just three years after it launched The MarketPlace, heralding B&B&#39s transformation into an independent retailer, the group is tendering multi-tie contracts to “all the usual” […]

L&G launches pension transfer CD Rom for IFAs

Legal & General is launching a CD Rom designed to make life easier for IFAs doing pension transfers. It includes product information, competitor information, transfer analysis and marketing support data.

Lipper revamp aims to boost comparisons

Rating agency Lipper is developing a new fund classification structure based on analysis of underlying holdings in a bid to offer IFAs and investors more detailed performance comparisons. The structure should allow IFAs to compare the funds in Lipper&#39s UK, European, global and North American equities categories using style and market capitalisation considerations. It could, […]

Europe: Volatile share prices create opportunities for long-term investors

Mark Page and Laurent Millet, managers of the Artemis European Opportunities Fund, look at why, how and where fluctuations in European markets can generate opportunities for their fund. When asked what the stock market would do next, John Pierpont Morgan is reported to have replied that “it will fluctuate”. His (apocryphal) answer proved accurate. Over […]


News and expert analysis straight to your inbox

Sign up


    Leave a comment


    Why register with Money Marketing ?

    Providing trusted insight for professional advisers.  Since 1985 Money Marketing has helped promote and analyse the financial adviser community in the UK and continues to be the trusted industry brand for independent insight and advice.

    News & analysis delivered directly to your inbox
    Register today to receive our range of news alerts including daily and weekly briefings

    Money Marketing Events
    Be the first to hear about our industry leading conferences, awards, roundtables and more.

    Research and insight
    Take part in and see the results of Money Marketing's flagship investigations into industry trends.

    Have your say
    Only registered users can post comments. As the voice of the adviser community, our content generates robust debate. Sign up today and make your voice heard.

    Register now

    Having problems?

    Contact us on +44 (0)20 7292 3712

    Lines are open Monday to Friday 9:00am -5.00pm