5 financial planning jobs your clients should tackle right now

Over the last few weeks, your clients may have found themselves with more time to tackle the little admin jobs that they have been putting off for months. You may even have seen a rise in enquiries as people get round to doing all those ‘boring’ tasks!

With tragic stories on the news daily, clients may also have reflected on their own arrangements and whether their affairs are in order should the very worst happen.

To help you, we’ve put together this handy five-point financial checklist of things your clients should consider doing now. From finally sorting out old pensions to making gifts, here are five things they should be getting on with.

1. Sort out old pensions

Can your clients say with any certainty what their existing pension arrangements are?

If they have worked for several employers over their career, they could have numerous pensions which could all make a contribution to maintaining their desired standard of living in retirement.

The Association of British Insurers (ABI) estimates that more than 1.6 million pension pots worth £19.4 billion are ‘lost’.

With the ABI estimating that each ‘lost’ pension is worth £13,000, it’s certainly worth your clients investing a bit of time and effort into tracking down their existing pensions. They could be surprised by what they find!

If a client believes that they have an old pension from a previous job, they can use the government’s free Pension Tracing Service to find it.

Alternatively, contact us and we can work with your client to establish exactly what retirement provision they have made, and whether it’s likely to be enough to sustain them when they finish work.

2. Arrange their protection

With tens of thousands of people hospitalised over recent months with Covid-19, clients may well have reflected on whether their families are adequately protected if something should happen to them.

Sadly, millions of households in the UK simply don’t have enough protection in place. The Financial Conduct Authority’s Financial Lives study found that two-thirds (65%) of UK adults have no life insurance or other protection cover. Only around a quarter (28%) of adults have life insurance while just one in ten have critical illness cover.

What this means is that there are millions of people in the UK who would be left financially vulnerable should their spouse, partner, parent or even employer pass away prematurely or suffer an illness or injury that would affect their earning potential.

If your clients haven’t reviewed their life, income and illness protection recently, it’s a very good time for them to review their cover. Again, we can help and provide advice if your clients need it.

3. Get a State Pension forecast

As we mentioned above, knowing exactly what pension provision clients have made makes it much easier for us to help them to plan their retirement.

As well as any provision clients have made through company or personal pension schemes, the State Pension also provides valuable income to clients in later life. And, since 2016, it’s been easier for clients to establish exactly what State Pension they are entitled to.

Individuals now qualify for the full State Pension if they have 35 ‘qualifying years’ of National Insurance contributions. These years are accumulated through being in full-time employment, or where a client received National Insurance credits because they were receiving Child Benefit.

Clients can check their State Pension entitlement at the government website as well as finding out when it will become payable. This is certainly worth doing now, as it gives clients the opportunity to fill any gaps in their National Insurance contribution record and improve their State Pension entitlement.

4. Create an ICE document

An ICE (In Case of Emergency) document lets a client’s loved ones know:

• Who their accountant, solicitor and financial adviser are
• Where their important documents are held
• Where to find their insurance policies, will etc.

Now is a good time for clients to put all the important information into one document. It makes it much easier for their family to deal with their affairs if something were to happen to them, particularly considering that it’s already likely to be a highly stressful time.

5. Make gifts

With millions of workers furloughed or facing an uncertain future, it’s quite possible that your clients may have decided to provide financial support to a friend or family member.

If they are considering this, it’s worth remembering that many capital gifts are considered a Potentially Exempt Transfer (PET) for Inheritance Tax (IHT) purposes.

If the donor were to die within seven years of making such a gift, it could form part of their estate for IHT purposes unless the gift qualifies for an exemption.

Clients can use their annual IHT exemption to make an outright gift of £3,000. This gift is immediately taken out of a client’s estate for IHT purposes and, if they did not use the allowance in the previous tax year, they can carry forward any unused allowance for one year.

Clients can also make unlimited small gifts up to the value of £250, as well as gifts of up to £1,000 per person on the occasion of a wedding (this rises to £2,500 for a grandchild or great-grandchild, and £5,000 for a child).

Gifts to charities are also typically exempt from IHT.

If your clients have surplus disposable income, they may also want to consider making gifts out of their income. These gifts can also be exempt from IHT providing that the gifts:

• Are regular
• Come from their disposable income
• Do not adversely affect their standard of living.

Get in touch

We’re here to advise you and your clients on all aspects of financial planning. If you have clients that would benefit from advice, or you’re interested in how you can work more closely with us, please get in touch. Email enquiries@prosserknowles.co.uk or click here to request a call back from one of our advisers.