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What advisers are saying: Tax planning aspirations


This week I experienced my first real pang of parental protection (you could argue that this should have, perhaps, come 11 weeks earlier but hey we’re all on a journey).

Talking to the father of a 16 week old (and significantly bigger) boy he commented that he hoped his son would befriend Noah rather than bully him. Now this was just bland, ‘pass the time’ baby babble between sleep deprived dads but while I smiled and nodded I thought “Yeah, but Noah would beat the crap out of him”. Which was both surprising and concerning given the church setting and the fact that I didn’t think the word ‘crap’.  Note to self: must not project own competitiveness onto child.

Aspiration is a process of reaching for the stars. But before you can reach for the stars it’s usually sensible to check the ground on which you are standing. Advisers we recently spoke to as part of our latest research into tax planning imperatives were fairly unanimous in their desire to do more work with wealthier clients.

Presently around two fifths of advisers’ clients (39.5 per cent) were estimated to be higher rate or additional rate tax payers. This rose to nearly half (48.9 per cent) among advisers with a £50m+ turnover. Of those, approximately 10 per cent of clients were estimated to be currently able to invest more than £40,000 per year towards their retirement.

But measured against advisers’ aspirational client bases – in which over three fifths (60.96 per cent) would be able to invest over £40,000 – there is a considerable gap (of some 52 percentage points between aspiration and reality).

When we look at how equipped many advisory businesses are to deal with the more sophisticated needs of clients from a tax perspective there are a few questions raised from the following picture:

  • 77 per cent of advisers believe tax planning hasn’t become any more important in the last 12 months.
  • Only 7.5 per cent of advisers have a specific strategy in place in light of GAAR measures.
  • Around half of advisers (48 per cent) have no particular measures (beyond their own planning process) to ensure their advice on tax efficiency is robust and relevant.
  • 10 per cent outsource to tax experts and 14 per cent claim to have in-house experts.

As advisers, en masse, seek to concentrate a higher level of service on a smaller group of wealthier clients, key questions to ask in relation to business aspirations are:

  1. Is the aspiration credible?
  2. Is the aspiration beneficial?
  3. Is the aspiration sustainable?

Unless there are three ‘yes’s, then some reconsideration may be useful.

Phil Wickenden is managing director of So Here’s the Plan



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