Intergenerational Wealth CPD course  

How tax relief tinkering will harm younger savers

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Guide to intergenerational wealth tools

“And it pushes people further in the direction of alternatives including cryptocurrency as a place to put their money.”

Advisers step in

This is why advisers have a place to help people understand their options and separate fact from fiction and fear, Aldridge says.

Bentley agrees, saying one of the most important things advisers can do is educate their clients on what allowances are available.

“This could be alerting them to the existence of lifetime Isas, helping them understand their ‘carry forward’ opportunities to make the most of previous years' unused pension contributions, or illustrating the importance of compound interest by encouraging them to set up junior pensions for children to take advantage of their stakeholder allowance from an early age,” he says.

But the role of an adviser is changing. Where they used to educate clients on topics they did not have exposure to, they now need to make sure clients have the correct information.

Bentley adds: “With so much information (and disinformation) available online, financial advisers need to be able to cut through the noise to show people what is most relevant to them, and by doing so will attract younger clients. 

“The upcoming generational wealth shift will be the largest ever, so advisers need to position themselves as receptive to younger clients’ expectations.”

This is especially important as younger generations are becoming more financially aware, says Ben Sherwood, director and chartered financial planner at Satis Wealth Management.

He says: “While many will find Isas and pensions rather boring, many more with whom we interact have a good understanding of pensions and Isas. They realise that the short-term tax benefits of a pension contribution are significantly greater than those available for an Isa contribution.

“Very few successful advisers can afford to deal with youngsters with limited resources. However, through websites and social media advisers can publish articles and raise awareness of the key issues.”

Past generations vs today

Sherwood says younger people nowadays face a harder time to build up a sufficient income for retirement due to “low interest rates and low nominal investment returns coupled with increased life expectancy and the demise of the defined benefit scheme”.

But Aldridge disagrees, saying the issue is not regulation, government policy or tax reliefs but instead a change of attitude.

She says: “Generally speaking, most people retiring now were brought up to be frugal and to save their money carefully, which is what they’ve done.