Almost two thirds (65 per cent) of adviser clients are concerned about potential changes to tax relief on pensions due to a change in government, latest data has shown.
According to research from Royal London, which polled 535 financial advisers, clients are also concerned about the impact of a new executive on estate planning and inheritance rules (64 per cent) and about potential changes to income tax (57 per cent).
Nine in ten pension advisers (90 per cent) reported that clients had approached them in the past two years to discuss the potential impact that a change in government could have on their finances.
Since the start of 2019, 54 per cent of advisers reported that the frequency of these conversations had either greatly (15 per cent) or slightly (39 per cent) increased.
A quarter (26 per cent) of advisers said their clients were raising the issue "often" with 10 per cent of advisers stating the topic came up "all the time".
Prime minister Theresa May announced her resignation on May 24, and her successor – either Boris Johnson or Jeremy Hunt – will be announced tomorrow (July 23) and appointed the following day.
Mr Johnson has vowed to make changes to the pension tax issues that are affecting doctors and others if he is elected as prime minister.
On the other hand, Mr Hunt has unveiled a series of proposals he would implement to tackle the social care funding crisis, which includes a tax break for families who look after their loved ones in their own homes.
Royal London found financial adviser responded differently to their clients concerns. Almost a quarter of them (21 per cent) said to customers to take a long-term view, while 16 per cent told their clients to wait until change has happened, or to base their financial plans on current legislation.
Other 15 per cent of advisers told their customers not to panic, while diversifying was a suggestion made by 13 per cent.
According to Becky O’Connor, personal finance specialist for Royal London, "politicians are using big financial topics such as inheritance and pensions tax relief as policy footballs, so worried investors are wise to seek views from their advisers on whether this will affect their plans".
She added: "With so much political uncertainty, the difficulty for advisers is knowing what to say. For the moment, ‘keep calm and carry on’, is the most common line of defence."
Alan Chan director and chartered financial planner at IFS Wealth & Pensions, noted that his clients tend to worry more about how taxation of pensions might change if there’s a new government than inheritance tax.
He said: "It is particularly concerning that taxation of pensions and inheritance have become the norm of politics and are being kicked around like a football. Clients are right to be questioning how these changes may impact on their financial plans and future.
"We normally tell our clients not to worry and we can only plan with what the rules are today and maximise on the current tax advantages now.