Advisers have been urged to address estate planning with their clients, after research from Octopus Investments found clients have been delaying financial decisions due to the pandemic.
A January poll of more than 700 advisers found three in five (61 per cent) had clients who had delayed making financial decisions as a result of the pandemic, including tax planning.
Barriers to communication were a potential cause of delays, with a quarter (26 per cent) of advisers saying it had become harder to communicate with their clients during the pandemic.
James Hawkins, founder of Isca Wealth Management, said: “I find one of the biggest barriers to writing business is clients wanting to talk but never actually going ahead.
“It’s not that clients don’t want to do it, but it can take them a long time to come to a decision. Unfortunately, lockdown has been a great excuse for some clients to say, ‘I’ll tell you what, let’s wait until this is over.’”
The poll found that more than half (53 per cent) of advisers said they had not yet engaged with clients who could benefit from tax-efficient investments.
Clients’ liability for inheritance tax also ranked as most likely to increase demand for tax-efficient investments, identified by four in five advisers (79 per cent).
Paul Latham, managing director at Octopus Investments, commented: “Not all tax planning will be considered urgent, but estate planning is certainly one area that some clients can’t afford to delay, as it’s often difficult to predict how soon it might be needed. The clock is always ticking.”
Although the poll was carried out months before the tax year end in April, Latham said: “Estate planning is the area of planning where delays tend to be a year-round issue, as clients often struggle to see urgency and there is no deadline tied to the year end. This often results in them putting it off for years rather than months, which can have a big impact on effectiveness.”
Likewise Paul Robinson, director at Moneyweb IFA, said: “With all inheritance tax planning, the earlier a client starts, the better position they’re going to be in further down the line.
“The problem is not going to go away if they don’t do anything about it. And ultimately, delaying conversations could cost a client 40 per cent of their wealth.”
chloe.cheung@ft.com
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