Financial advisers and tax advisers should be working together, to tackle a growing distinction between the two specialisms, according to chartered accountants Saffery Champness.
James Hender and Lucy Brennan, both partners are Saffery Champness, emphasised the difference between tax advisers and financial planners.
Mr Hender said that the distinction between tax advice and financial planning, which changed about 20 years ago, is now very strict.
“It is common that financial advisers cannot give tax advice, because they are not regulated to do so,” stated Ms Brennan. “Conversely, a tax adviser usually cannot give investment advice for the same reason; however the two professions are very much complimentary.
“The tax implications can make the difference between a good investment decision and a bad one. Consulting a tax adviser from an early stage allows you to build the tax position into your advice with certainty, and could well alter the shape of the final advice you give.”
Recent tax reforms around pensions and enhanced Isas have created several new pitfalls, but also significant opportunities to restructure portfolios,” said Ms Brennan, adding that whether advisers from the different fields should work together depends on the client and their requirements.
“In some cases a client may not have an adviser; for example they may be discussing financial planning with a wealth manager so may not have realised that they need a tax adviser as well.”
She noted that there are also many reasons why advisers do not work together, for example, client preference. “Some clients prefer to keep their affairs separate, while others are concerned about the cost of having more than one adviser look at a project, however in my experience any initial extra cost ultimately produces savings in the long run.”
Ms Brennan added: “Financial advisers, if they are doing anything with their clients should be very much checking, and they normally do, that their client has had independent tax advice into what they are doing and whatever it is they are doing is considered fine.”
George Bull, senior tax partner at Baker Tilly, said that the investment approaches of a financial adviser which are not tax efficient may turn a successful investment strategy into a failure, commenting that if a financial adviser does not understand the tax position then it is up to them to work with an existing tax adviser or introduce a tax adviser.
“If you don’t understand the tax position you may produce the wrong answer, for all the right reasons; tax is part of the everyday life of financial advisers.”
ruth.gillbe@ft.com
