Quarter of advisers concerned gifting could leave clients short

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.

For example, only 13 per cent were confident we will see a plan this Parliament, compared to 26 per cent in 2020, whereas 58 per cent were not confident, up from 40 per cent the year before.

Lowe said: “With promised reforms failing to materialise, advisers remain at the front line of encouraging more people to prepare for potential care costs, giving them peace of mind and saving them from what can often be a brutal shock of having to access very expensive professional care in later life. 

“The government really needs to address this issue because people who aren’t prepared can create extra costs for the public purse in terms of extra pressure on the health service as well as pressure for families trying to look after them. 

“It is time our leaders had the political will and courage to act. It is time to ‘Get Social Care Done!’.” 

Social care reform has been on the list of things to fix for a while, with successive governments promising to address this issue and subsequently not following through with their promises.

The prime minister has promised repeatedly to 'fix' the social care system and the Conservative party manifesto promised to address the issue. In a speech in late June last year he said the government was ‘finalising’ plans to solve the issue.

Despite this, social care funding was once again absent in this year’s March Budget.

As part of the Queen’s Speech, delivered last month (May 11), the government said it was committed to improving the adult social care system but gave no further details on how it would achieve this.

amy.austin@ft.com

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