A recent Fidelity1 report finds more advisers are seeking new clients than before the coronavirus pandemic, with 77% looking to grow their client bank. But in the current climate, can advisers find untapped opportunities among existing clients? This article looks at generating new business by spotting clients who could benefit from tax-efficient investments. Octopus is holding an online event on Thursday 5 November if you’d like to find out more. Full details here.
Estate planning
An ageing population means the demand for inheritance tax planning is high.
Business Property Relief (BPR), a longstanding relief from inheritance tax, has an important role to play.
Towards the end of 2019, an Octopus survey found nine out of ten advisers had clients reluctant to give up access to capital as part of their estate planning2.
BPR can be a useful tool to move estate planning discussions forward, because it allows a client to retain control of their wealth. Knowing that using BPR-qualifying investments to plan for inheritance tax can be reversed often gives clients peace of mind.
Because the investment stays in the client’s name, if the investors situation changes, the investor can sell some or all of the investment at any time, subject to liquidity.
Existing client referrals
On the subject of estate planning, you may want to consider using a family tree to help uncover family connections and the impact of planning.
This helps make the planning ‘real’ for your client, bridging the gap between cold numbers and emotion-driven life goals.
It can also be a good opportunity to discuss estate planning, and potentially receive referrals to other family members. An example of how that might work is by asking two indirect questions.
The first is: “Might you need to help your parents?”
This reinforces the idea that planning has real world consequences and usually gets the response no, the client’s parents are comfortable.
Which leads to the second question: “Might your parents want to help their grandchildren, perhaps with school fees or their first property?”
Often unsure, the client realises it’s a possibility. After all, grandparents are famously doting, so almost always they’ll say yes.
This creates a natural reason to speak to the client’s parents.
The same goes when discussing inheritance. Rather than ask clients if they expect to receive anything, which could make them feel greedy, consider a shift of focus.
“Might your parents want to leave something to their grandchildren?”“Maybe.”“Then it’s important I speak to them to make sure that happens as efficiently as possible.”
This indirect approach is also just as effective when looking to engage with beneficiaries, who may themselves become clients when they inherit.
To help, the Octopus document ‘What I Own and Where I Keep It’ is available from your Business Development Manager and helps executors easily locate the deceased’s will and assets.
It’s a natural opener for suggesting you speak to beneficiaries, as they’ll often be the ones using this document.
VCT and EIS knowledge
There is also an opportunity in recommending Venture Capital Trusts or the Enterprise Investment Scheme to help high-earning clients reduce their tax bills, diversify their portfolios, and create a tax-free income stream or growth.
