5 important times a professional financial planner can add value to your service

Whether you’re an accountant or a solicitor, it’s likely you’ll deal with a variety of complex issues for your clients. From will writing to legal contracts, tax returns to audits, your business is likely to help many clients with a myriad of issues on a daily basis.

However, in our increasingly technical and competitive world, keeping ahead of the competition can sometimes be less straightforward than providing good advice. Maintaining and increasing business can be about the journey you give to clients and the extra touches that provide additional value.

One way you can go above and beyond, and enhance your company’s reputation and business levels, is helping clients understand the financial implications of their issues. This is where we can help, providing your clients with a deeper understanding of the financial considerations that often dovetail into legal and accountancy ones, helping them to achieve better outcomes.

Discover five times a financial planner can help you as an accountant or solicitor, enhance clients’ experience with your company, which in turn will boost your reputation and standing.

1. Inheritance Tax (IHT) issues

According to government statistics, HM Revenue & Customs (HMRC) received £0.5 billion in April 2021 in IHT receipts, a rise of £0.2 billion compared to the same period the year before.

The following graph shows how IHT receipts increased, a trend that is likely to continue following the chancellor’s announcement to freeze the Inheritance Tax nil-rate band (NRB) until 2026. According to the Treasury’s own figures, the freeze will raise an additional £445 million for the government over the next five years.

Source: Gov.uk

This exemption allows clients to pass £325,000 – or £650,000 if they are married – to loved ones when they die before being liable to IHT. The tax is typically charged at 40%.

Clients could also benefit from the residence nil-rate band (RNRB), which may increase their total exempt amount to £500,000 for an individual, or £1 million if married.

In addition, HMRC allows gifts to be made annually, which includes a total £3,000 to anyone your client chooses.

As a solicitor, writing a will may be a good opportunity to work with a financial professional who can help your client ensure they leave more money to loved ones as tax-efficiently as possible. It also ensures they do not fall foul of the many caveats and stipulations around the exemptions and gifts, which, if breached, could cost a client’s estate dear.

Likewise, if you are an accountant for a client with an IHT liability, working with a financial planner could help reduce that liability by potentially investing in funds that offer Business Relief. This could allow your client to pass more money to loved ones in a more tax-efficient way.

2. Trustees and attorneys could benefit from in-depth financial planning

As solicitors or accountants you may deal with trustees and attorneys as part of your work. As you’ll know, both trustees and attorneys have to demonstrate integrity at all times and comply with the legal requirements their roles carry.

This includes being able to demonstrate the thinking behind any decision made, ensuing the financial element of their role is dealt with proactively, and that anything they do is in the interest of the beneficiary or donor.

Financial planners can help clients by:

  • Ensuring they understand their responsibilities around proactively managing investments or savings
  • Helping them demonstrate impartiality, as a financial planner is an independent third party who will provide documentation detailing any recommendation made. This also provides evidence of any decision your client makes.

We as financial planners can provide your clients with peace of mind and the confidence to make necessary decisions, reducing the potential stress that can come with the role.

3. Help your clients to inflation-proof any money received

As an accountant or a solicitor, you may deal with a client who has received proceeds from a property or business sale, inheritance, or compensation. In this situation, financial planners could help preserve the value of the money in real terms as we can help shield that money from inflation that may devalue it in real terms in an environment of low interest rates.

According to a recent article in the Guardian, in May 2021 the average easy access account rate was 0.16%, down from 0.4% a year ago. If your client looks at a fixed-term offer, they could achieve more, such as Atom’s Fixed Saver account, which offers 0.85%.

However, these rates are still below the rate of inflation in May 2021, which stood at 1.5%. More than this, as Britain returns to a post-Covid normal there are increasing fears that the economic boost of people spending pent-up savings could drive inflation up further.

As shown below, in the last five years inflation has, at times, been more than 3%.

Source: Office for National Statistics

A financial planner could help your clients shield their money from inflation, ensuring that any solution used is appropriate for them and as tax-efficient as possible.

4. Helping business owners protect their company and enhance tax efficiency

If you’re a legal professional or an accountant, the chances are you will be working with the business owner or directors at some point.

As a solicitor, for example, you might deal with the Business Partnership Agreement for a company’s directors, the very people who may have built the firm and would not want to see it falling into the wrong person’s hands should one of them die.

This could happen, for example, if fellow directors do not have the money to buy the company from a family member who inherits the deceased’s share of the organisation, but does not want to take it on. As a result, the family member may sell it to a competitor, or someone the directors would not want in the company.

Financial professionals can help ensure a financial safety net is in place, that provides the funds for directors to buy the deceased’s share of the company, keeping it in safe hands.

In addition to this, we can also help accountants ensure businesses are as tax-efficient as possible, for example, by using pension contributions to potentially reduce company’s exposure to some taxes and National Insurance contributions.

5. Ensuring new homeowners protect their home from a financial curve ball

If you are carrying out conveyancing work for a client, speaking to a financial professional about protection could help ensure their home is not at risk if anything were to happen to them. If you are an accountant speaking with a client that is applying for a mortgage, the same could apply.

This is because buying a property can be an excellent time for your client to review their protection needs.

While it’s likely they will take cover to ensure the mortgage is paid off if the worst happens, they may not have considered the implications of not being able to work for extended periods. This could be because of an illness or an accident, which may result in a loss of income.

In this situation, their home might be at risk as they may not be able to meet the mortgage repayments.

Misconceptions around cost of cover could result in homeowners not ensuring they have an adequate financial safety net if anything happens. Speaking to a financial planner can ensure cover is found at the most suitable cost to your client, and it is appropriate for their needs.

Get in touch

At Ardent, we will provide your clients with personalised financial planning and advice that is tailored to their needs. By getting to know your clients and their goals, we can ensure they access pensions at the right time, in the right way, and as tax-efficiently as possible.

To find out how, please email hello@ardentuk.com or call 01904 655 330.

Please note

This article is for information only. Please do not act based on anything you might read in this article. All contents are based on our understanding of HMRC legislation, which is subject to change.

A pension is a long-term investment not normally accessible until age 55 (57 from April 2028). The fund value may fluctuate and can go down, which would have an impact on the level of pension benefits available. Past performance is not a reliable indicator of future results.

The tax implications of pension withdrawals will be based on your individual circumstances. Thresholds, percentage rates and tax legislation may change in subsequent Finance Acts.

Get in touch

By talking about your current situation and listening to your aims, we create a personalised plan that will put you on a path to achieving your aspirations.

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