In Focus: Intergenerational Wealth  

Quarter of advisers concerned gifting could leave clients short

Quarter of advisers concerned gifting could leave clients short

One in four advisers feel compelled to challenge their clients’ decision to gift money to their children for fear it could leave them short in later life.

Research from Just Group, found out of 214 advisers polled in May, a quarter would attempt to stop their clients from gifting money or encourage them to give a lower amount.

The top three reasons given for doing this were that the client had not considered how long they might live and might need income (67 per cent), they had not considered how they might pay for care in later life (48 per cent), or they did not have enough money to give away (40 per cent) in the first place.

According to Just’s annual care report, published today (July 7), 22 per cent of adviser clients had already gifted a sum to their children while 23 per cent were planning to.

It found that out of 1,104 people surveyed, four in 10 parents aged 45 plus had gifted more than £5,000 to children aged over 18 to help them cover major expenses such as weddings, house deposits or to pay for education.

Stephen Lowe, group communications director at Just Group, said: “The Bank of Mum and Dad is very much open for business with almost all advisers (95 per cent) having at least some clients who wish to make living inheritances to their children.

"But with about one in four clients advisers face the tricky challenge of how to make their clients reconsider the wisdom of giving money away early. 

“Advisers tend to deal with wealthier people but even so their insight and expertise means they will sometimes have to challenge a client’s plans to make financial gifts. 

“These can be difficult conversations but advisers understand it is important they raise these concerns because their experience suggests the client may otherwise face financial hardship later.” 

Social care reform

Fewer than a third of those who had made a financial gift to their children said they had considered the costs of later life care. 

Despite this, 59 per cent were confident they would have sufficient money to pay for professional care should they need it.

Just said its report highlighted the reluctance among many over-45s to plan for future care needs.

Recurring delays to reforms of the care system were partly to blame for this as it discouraged them to start planning for the future now.

According to the research, there were a variety of reasons people did not think about care, ranging from it being too depressing to plan (28 per cent), costing too much (12 per cent), that they were too young (17 per cent), the system was too confusing (8 per cent) or that they were waiting for the government to clarify its reform plans (12 per cent).

This is further exacerbated by the fact that people had little faith in the government producing a social care plan in this Parliament.

Just found people were about half as confident this year than they were a year ago in the wake of Boris Johnson’s election win.