Helping an uncertain client

Estate planning involves making decisions about assets a client has spent their life accumulating. And often these will be decisions about large sums of money.

Many clients assume that all estate planning means giving away large chunks of their wealth and putting it permanently out of reach. They often won’t feel confident about their future needs, even when they can comfortably afford to make gifts from their estate.

That can create a barrier to successful estate planning conversations.

Investments that qualify for Business Property Relief (BPR) can be left free from inheritance tax on death provided they have been owned for at least two years (and are still held on death). These provide a way for a client to start to plan for inheritance tax without giving away wealth.

Explaining to a client that there are ways to plan for their estate without giving away wealth can move the conversation forward – even if the client eventually decides gifting is the way to go.

But the pandemic has left some clients with uncertainties about the economy and investing.

So some clients might hesitate when considering making an investment that qualifies for relief from inheritance tax as part of their estate planning.

However, there are options designed to cater for a variety of client attitudes to risk, with AIM-listed portfolios typically targeting higher levels of growth, and investments in unquoted companies targeting more predictable returns.

Indeed, there are investments that qualify for relief from inheritance tax which are designed to perform consistently throughout the market cycle, and that have the track record to demonstrate this.

“If you explain what goes on behind an unquoted portfolio that qualifies for Business Property Relief, clients tend to feel more reassured,” says James Hawkins of Isca Wealth Management.

“It looks balanced and considered. And I think the reason is the client can see that so much is being done to try and reduce the risk of market sentiment.

“It doesn’t necessarily correlate to the market in the same way an AIM portfolio might.”

Tip – Use investment providers to reassure clients

“A fundamental thing at Ludlow is how we work with providers,” says David.

“If I were faced with a client who was uncertain and looking to put off making a decision about any investment, I’d spend a bit of time with the provider and potentially bring someone from the firm onto the call as well.

“I’d be explaining to a client that throughout the pandemic we would have spoken to providers and been on every webinar.

“We’ll have a very detailed knowledge and understanding of what underpins a product and how it’s performing.

“We’ll have looked at the future and how we see it. And I’d share that with the client and explain that, although it can be perceived as a difficult time to invest, when you look under the bonnet this investment is still doing exactly what it’s meant to do.”

For the latest Octopus fund manager update webinar, or performance factsheet relating to our inheritance tax solutions, contact your local business development manager here.

Tip – Use materials to put the client at ease

Certain materials can help a client considering a BPR-qualifying investment.

“We tend to send a full report after every conversation. With that, we’d send the Ludlow factsheet we have on BPR. We might also at that point use some provider collateral as well,” says David Hardman of Ludlow Wealth Management.

“We find it really useful for clients to read through something that has some facts and some examples. It’s fine to say this isn’t a formal recommendation, it’s just so you can spend some time understanding the background to it.

“Then I can go on to the next meeting and talk about what they’ve read and ask if they had any concerns. I can build it up from there really.

“Once the client understands the background to BPR, they start to realise it’s not much different from making any investment. It just has this added potential benefit in return for the additional risk they take, which is actually what they’re looking for.”

“It’s about nurturing the client along and explaining everything at every different stage. You’ve got to gradually introduce it and go on a journey with the client,” explains Paul Robinson of Moneyweb.

“The process is exactly the same as what we would do with a pension transfer or an ISA transfer, it’s just that it needs a little more explanation at certain key points in that journey.”

As part of the collateral you use with clients, you might want to consider our animated video introducing Business Property Relief, which you can share with a client as a conversation starter.

This useful tool can be found in our client conversations toolkit below.

Client conversations toolkit

Use our resources to educate and nurture clients when having conversations about estate planning.

See our toolkit