With BPR, clients know they can request to sell their investment at a later date
If providing financial advice were just a matter of logic and numerical calculations, so-called robo advice would probably have taken off by now.
But we all know that isn’t the case. People feel an emotional attachment to their money. Where it came from, and where it goes, are both deeply important to them.
This has profound implications for conversations about estate planning, and about Business Property Relief in particular.
“There’s often a control thing where clients are worried about whether they can afford to give their money away,” says Jessamy Walker, a chartered financial planner at Brown Dog Financial Planning in Berkshire.
“That’s where BPR-qualifying investments can come in, it tends to make the conversation a lot easier.”
Unlike with many other types of estate planning, with BPR it’s possible to do the planning now and reverse the decision later. In practice, most investors tend to stay in the investment for the rest of their life, but they know they can request to sell at any time. This can make a big difference to peace of mind and willingness to take action.
Access is a benefit of some BPR-qualifying investments, but it’s important for clients to understand that liquidity can’t be guaranteed. BPR-qualifying investments are made into unquoted companies or companies listed on the Alternative Investment Market and selling shares is not as easy as selling shares of companies listed on a main market.
The fact that the investment stays in the client’s name is a feature cited by a lot of advisers we work with as one of the reasons a BPR-qualifying investment is right for their client. A BPR-qualifying investment won’t be suitable for every client though, it’s important to take into account their objectives, attitude to risk and capacity for loss when making a recommendation.
If you have clients with estate planning needs who want to retain access to their capital, find out more about how BPR could help them at here.
Clients like to see where their money goes
Some advisers also find that when they explain to clients about the impact their investment will have, it helps the client feel more comfortable about making the investment. Clients are often very interested to hear about the activities of the companies they hold shares in.
My colleague Neville Flood, a senior business development manager, recalls one occasion when a client had a definite estate planning need, but said they were uncomfortable not paying as much inheritance tax because it would mean less revenue going to the Government.
“That was until she learned more about what the BPR-qualifying investment she was considering actually does,” says Neville.
“Her adviser revisited the product, and the fact that it invests in real businesses that provide employment for people. They talked about how the client’s money would fund renewable energy projects, how it would help build healthcare facilities and GP surgeries. The client saw that by investing in a BPR solution, she’d be investing in the infrastructure of the UK economy.”