The imminent inheritance tax (IHT) grab on pension pots is a pressing topic for advisers and their clients, according to the latest Schroders UK Financial Adviser Pulse Survey.
The asset manager found that 92% of advisers have held conversations with clients following the government’s proposals in the Budget to include any unused pension assets in the estate for IHT, with gifting ‘firmly on the agenda’.
The implementation date for the IHT changes announced by Chancellor Rachel Reeves of April 2027 is driving this focus; with 47% of advisers expecting that over half of their clients will require an update to their financial and retirement plans prior to the proposals being introduced.
Schroders said the primary strategies discussed with clients in relation to the proposals are increasing withdrawals to then gift out of normal expenditure (81%), and changing the order in which assets are drawn down from tax wrappers (75%).
Also a major focus among the 272 advisers taking part was the great wealth transfer between the current generation of retirees and their offspring.
The changes to pensions announced in the Autumn Budget have brought retirement planning into focus in other ways.
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Researchers found 84% of advisers are engaging clients in discussions about the suitability of annuities compared to drawdown options.
Again on the regulatory front, 71% of advisers think that proposals to restrict savings into cash ISAs will encourage clients to invest more in stocks and shares ISAs.
The survey was conducted after Donald Trump’s ‘Liberation Day’ tariffs annnouncment, amid significant market volatility.
Schroder said it is therefore ‘unsurprising’ that feedback indicates a significant shift in clients’ investment sentiment, with the percentage of advisers saying sentiment of their clients is bearish rising to 43%, from 18% in November 2024. In contrast, just 10% of clients are now bullish, down from 40% this time last year.
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Almost two thirds (64%) of advisers anticipated increased market volatility— this is the highest level recorded since data collection began in 2019 and up from 43% in November 2024. Additionally, the proportion of advisers expecting lower global growth has tripled, rising from 8% to 24%.
Jamie Fowler, head of UK wealth at Schroders, said: “The survey provides a snapshot of how clients and advisers are responding to the current environment, with the latest market volatility a key influence.
“Recent data has shown that the fall in markets in April was erased by the rebound, showing how crucial it is to stay calm and remain invested.
“At Schroders we are firm believers in the value of advice and active management. The role of an adviser is thereby crucial in providing the expertise needed to help clients grow wealth in the long run while navigating short term volatility and ensure their peace of mind.”
Gillian Hepburn, commercial director at Benchmark, part of the Schroders Group, added: “The Autumn Budget proposals to include unused pension funds as part of the estate for inheritance tax has turbo charged conversations with clients, not just about pension retirement funding but their broader financial plan. This includes increasing conversations around gifting and helping clients to understand the optimum time to transfer assets to the next generation.
“The Schroders UK Financial Adviser Pulse Survey has tracked wealth transfer for many years but, with 92% of advisers having conversations with clients about this, are we finally at an inflection point?
“Financial planning businesses like Benchmark have a significant role to play when working with clients to explore the range of options available and also to ensure that advisers have the appropriate proposition and also the soft skills required for what can often be difficult family conversations.”
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