Financial advice is fast becoming primarily about innovative tax planning, Sebastian van Mook, a financial adviser at Abacus Associates, has said.
The Shropshire-based adviser said: “The role of an adviser is to add value. A tax planning operation to mitigate the tax a customer pays would add more value.”
He said that if advisers want to build their business, they will need to get “savvy with tax planning”.
Mr van Mook said he recently had an enquiry from a client, who wanted to review his current funds and cash holding and look at maximising his investments.
He told the client he could do it, and informed him of the cost, but advised him to take a different course of action.
“I told the client to not go down that road, as he had to consider the implications of inheritance tax and the cost of care.”
He said that if he facilitated an enquiry a year down the line he would have to have a discussion centring on those two areas.
“This would lead me to undo the advice I had given the client a year earlier. There are advisers who do whole holistic financial planning but in reality it does not happen.
“Advisers have to be brave enough to stop a conversation and start a new one around issues such as IHT or the cost of care. This will create much better value to the client than just steamrolling in and knocking investments together.”
Mr van Mook also said it was crucial for advisers to work with accountants and solicitors.
He said: “In areas such as capital gains tax work I would work with an accountant. It is as important as ever to work hand-in-hand with an accountant and solicitor.”
Industry view
Anita Monteith, tax manager at the Institute of Chartered Accountants of England and Wales, said: “I would urge caution, as if one is negligent, a tax allowance or relief could be missed.
“It is a very good idea for advisers to work with accountants, especially in areas such as pensions where the rules change all the time. A working relationship between someone who is proficient in the tax rules and someone who knows financial products would be a huge benefit to customers.”
