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What advisers are saying: Using protection for estate planning


Thirty-four per cent of active market investors who have bought from an IFA in the past five years say they will “never” consider paid-for investment advice in the future. 

By comparison, IFAs expect to lose only 14 per cent of their client base. 

That is a pretty significant gap of 20 per cent and could be a problem, according to GFK, which estimates that 200,000 more clients than IFAs anticipate are unlikely to pay for advice in the future.

Then again, human beings are pattern-making machines. That is a key to our survival instinct: we seek out patterns and use them to predict the future.

Which is great, except when there is no pattern; when our pattern-making machinery is busy picking things out that truly do not matter. 

That is not necessarily the case with GFK’s research but there are plenty of good news stories from the front line to suggest otherwise.

Either way, the question, Why will clients pay for advice?, remains valid and is one that no advisory business can afford to presume to have pinned down.

The wealth planning process has been pretty well honed by most advisers over the past few years, moving from the establishment of financial objectives and attitude to risk through asset allocation, portfolio construction and wrapper choice and allocation.

But what about risk? Death, serious illness, tax… this is the kind of planning that you cannot replicate so well via non-advised avenues, which surely makes wealth protection a must-have in the advisory armoury.

Between where clients are now and where they want to be lies investment with protection. Or it should.

While a large proportion of wealth management clients have fewer family protection needs, inheritance tax protection in relation to the liability on the estate is often a very real need.

 Related to this is the potential to improve the effectiveness of a loan trust (while the loan is outstanding) and a discounted gift trust for the seven years following its establishment. Appropriate term assurance in trust is the solution.

But our research shows this is consistently under-advised territory, which means advisers are missing out on the opportunity to deliver value which is truly appreciated and which clients are more than happy to pay for.

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

IFA quotes from research…



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