The shopper is inquiring whether a gift of £10,000 from her 80-year-old grandmother – who has an estate worth around £1m – to help fund her wedding in December would be free of inheritance tax. In January, the shopper also received £3,000 for her birthday, as did two other grandchildren.
The shopper wants to know if there is a separate annual exemption for birthday and wedding gifts, and what other gifting options are available.
Each week the mystery shopper seeks advice from independent advisers in the UK.
The aim is to find out whether advisers are delivering the goods when it comes to the all-important initial telephone contact between client and adviser. It is only intended to evaluate this first interview, and it is understood that further meetings would be necessary before final decisions could be made. The purpose is not to expose poor selling practices, but to show constructively any weaknesses in the advice process.
Adviser: Sanctuary Financial Planning (Independent)
Address: Unit 15/16 Neptune Court, Vanguard Way, Cardiff, CF24 5PJ
Speed of response: 10:00am. Transferred quickly to an adviser. 5/5
Telephone manner: Polite and professional. 5/5
Qualifications: Dip FA, Society of Later Life Advisers Retirement Advice Standard and Later Life Adviser Accreditation. 5/5
Payment method: The adviser explained there is no cost for an initial sit-down. A fee would be charged upon further advice, depending on the grandmother’s individual circumstances, including intent, health and estate details. He was reluctant to give a range without further information, or on what basis rates are charged. 3/5
Guidance: The adviser estimated the annual gift limit to be £3,000, but in order to know whether IHT will be an issue in the future, he would need more specific information about the grandmother’s estate. He also asked whether her grandmother was still married, as she could use her spouse’s allowance to extend her own. He suggested the shopper visit the Society of Later Life Advisers website to get more information, and to call back to arrange a face-to-face visit, upon which more options and a fee would be discussed. 4/5
Knowledge: The adviser was clearly knowledgable about the complexities of IHT such as the annual allowance limit, being able to pass on the allowance to a spouse, types of gifts exempt from the overall £325,000 threshold, and the different tax rates. He was, however, reluctant to oversimplify IHT solutions and to discuss further details over the phone. 4/5
Website: https://www.sanfp.co.uk/
Email: shane@sanfp.co.uk 5/5
Verdict: The shopper was connected quickly to a professional and helpful adviser, who suggested she seek further information via the Solla website, but was unable to give more details over the phone. Nevertheless, the shopper felt comfortable talking to the adviser and would not hesitate to arrange a face-to-face meeting.
Total score: 31/35
Adviser: Niche Chartered Financial Planners (Independent)
Address: 8 Pen-Y-Lan Oval, South Glamorgan, Cardiff, CF23 6AU
Speed of response: 11am. Connected to an adviser immediately. 5/5
Telephone manner: Polite and professional. 5/5
Qualifications: Dip PFS, associate of the Personal Finance Society, chartered member of the Chartered Institute for Securities and Investment. 5/5
Payment method: Following a free consultation, where an adviser would set out proposals and services, once a clearer picture of the grandmother’s goals and finances had been gained, the rate for advice would be £150 an hour. 5/5
Guidance: Given the information provided, which the adviser said was still too vague, IHT would likely have to be paid in the future, but to know exactly how much would require more information. He said the amount of IHT would vary depending on whether her grandmother’s wealth passed on to direct descendants, if she had a will and any other savings in her name. He said a lot of other questions exist around IHT, and so to have any meaningful discussion, the grandmother would need to be present. 3/5
Knowledge: The adviser demonstrated good knowledge of IHT, explaining the shopper’s grandmother can give away £3,000 worth of gifts each tax year without it being added to the value of her estate, and another £2,500 as a wedding gift for a grandchild. But to know the extent of potential IHT, more information was necessary. 4/5
Website: http://www.nicheifa.co.uk
Email: aled.phillips@nicheifa.co.uk 5/5
Verdict: Shopper's Choice: The adviser was polite and offered a good description of what would be involved in the first consultation, offered a fee for the service and showed sound knowledge of the different exemptions. He did not hesitate to give his email, but without more information, he was reluctant to give any other details over the phone.
Total score: 32/35
Adviser: NTM Financial Services (Independent)
Address: Unit 12, Cwrt Y Parc, Earlswood Road, Llanishen, South Glamorgan, Cardiff, CF14 5GH
Speed of response: 11:30am. The shopper was transferred to the firm’s first point of contact – a practice manager – who offered to schedule a meeting with an adviser. 4/5
Telephone manner: Professional and moderately friendly. 5/5
Qualifications: Practice manager with a level 3 Diploma in Business Administration and a level 4 Diploma in Leadership and Management. The shopper would, however, be advised by a certified financial planner with a Dip PFS. 5/5
Payment method: She said there would be no obligation to pay during the initial meeting, but that a charge would be incurred for subsequent meetings and advice. She did not give an estimate of the cost, or on what basis rates are charged, explaining the process was extremely complex and would depend on a number of things. 3/5
Guidance: At first, under the impression the shopper’s grandmother’s estate was valued at less than £500,000, the office manager suggested general IHT information was available online. However, when the shopper clarified her grandmother’s property was worth £500,000, not her whole estate, and that she also had another £500,000 in cash savings taking the overall estate to £1m, the manager said the grandmother would, in that case, be better off seeking further advice with a qualified adviser, suggesting an appointment was necessary to gain more in-depth information as IHT was a sensitive issue. 4/5
Knowledge: She showed good knowledge of IHT, initially offering some information such as the 40 per cent tax cut for anything over the £325,000 threshold, with no IHT to pay if the value of the estate is anything below, and that when the gift is first made it is called a potentially exempt transfer as, assuming the person gifting lives for a further seven years, there will not be any IHT due. She also acknowledged there was a separate exemption for wedding and birthday gifts, but reiterated the information was all accessible online. 4/5
Website: http://www.ntmfs.co.uk/
Email: sarahevans@ntmfs.co.uk 5/5
Verdict: While mostly polite and evidently knowledgeable about the complexities of IHT such as the £325,000 threshold and different exemptions, the shopper was slightly put off by the practice manager’s attitude to wealth – first by being told to simply look online, then after clarifying her grandmother’s estate was around £1m, told seeking professional advice was in fact the right thing to do.
Total score: 30/35
Adviser: Hartley Ross (Independent)
Address: Forgeside House, Cardiff Bay Business Centre, Forgeside Close, Lewis Road, Cardiff CF24 5FA
Speed of response: 4pm. The shopper left a number with reception and received a call back from the adviser later that day. 4/5
Telephone manner: Very polite and professional. 5/5
Relevant qualifications: Senior partner with a Dip FA. 5/5
Payment method: Initial consultation would be free, upon which a fee for advice would be calculated based on the grandmother’s decision, but a range or method of calculating costs for advice was not discussed. 3/5
Guidance: The adviser offered to email the shopper more information from the government’s website, a fact find form and a ‘dynamic planner risk profiler’ form – to be filled in and posted prior to organising a meeting. He said a face-to-face consultation would be necessary to gain a better understanding of the grandmother’s financial situation and aversion to risk. If she worried about her grandchildren losing out on some of the money to tax, other ways of utilising it could be through a trust, investment, or a whole-of-life insurance plan. How much IHT would be paid, if she were to pass away within the next seven years, would depend on a number of things, but the adviser said this could all be worked out once they had more information. 4/5
Knowledge: The adviser explained the standard IHT rate and gift exemptions, the different amount for wedding gifts and birthday gifts, as well as other options available such as trusts, insurance and investments. He talked in depth about each option, showing a high level of IHT knowledge and understanding, as well as compassion for the grandmother’s situation. 5/5
Website: https://hartleyross.com/
Email: daniel@hartleyross.com 5/5
Verdict: The shopper felt at ease talking to the adviser who did not hesitate to share contact details, showed a high level of knowledge, and importantly, offered the most detail in terms of other options available, such as a whole-of-life insurance plan and trusts, without being asked.
Total: 31/35
