Advisers have not received much in the way of queries about accessing their CTFs, but this could be just down to inertia more than anything.
Krupesh Kotecha, financial planner at Balance: Wealth Planning, said: “As the children begin to reach age 16 and have the option to take over the management and investment decisions (but not access the funds until age 18) I suspect for most families things will probably remain unchanged with the CTFs remaining under parental supervision.
“I would encourage all 16 year olds and parents to actively encourage involvement and start the education process into the principles of savings and money management now, and if they have a financial adviser then bring [the child] along to discuss this at their next meeting so they can better understand the ins and outs.”
David Hearne, wealth management adviser at Satis Asset Management, said: “Particularly if they were funded by grandparents, who I believe can exert a greater behavioural influence of responsibility than parents can.
“Your Nanny saved that, so that you could get the education she never could’ is a powerful line, whether it comes from Nanny, or as a reminder from the parents.
“Are they really going to spendit all on that holiday to Ibiza knowing that?
“I would also encourage parents to work with their children to identify what opportunities they have. Continuing to invest the money is not always the best answer, a new motorbike or car might be better if it helps them get to college or a new job.”
Opinion is mixed over whether the Junior Isa is a good alternative.
Mr Kotecha said: “The Junior Isa (which replaced CTFs in 2011) is another very good way to save for children. Like an ordinary Isa they are available as a cash or stocks & shares Isa and although there are limits to how much you can save (currently £4,260 for 18/19 tax year) there is no tax on interest, dividends, or gains, so these provide a tax efficient wayof saving.
However, Mr Hearne said: “I don’t think Junior Isas are a particularly useful product. I fear they can be a distraction for some from focusing on their own financial plans. I imagine it feels good to think you’re saving for your children, but like the oxygen masks on a plane, you should ensure you are prepared yourself, before you help your children.”