Surge in Client Queries for Financial Advisers Ahead of Budget

Independent financial advisers in the UK are experiencing a notable increase in client inquiries as the November Budget approaches. Speculation surrounding potential tax changes is driving this surge, with data from wealth management firm Rathbones indicating that 90 percent of independent financial advisers (IFAs) have reported heightened interest from clients.

The analysis reveals that nearly a third of advisers have seen client queries rise by 26 percent to 50 percent, while two-thirds noted an increase of 11 percent to 25 percent. This uptick is attributed to growing concerns over tax rises and pension reforms, as Chancellor Jeremy Hunt seeks to address a £20 billion fiscal deficit without violating Labour’s pledge to avoid raising taxes on “working people.”

Client Concerns Fueling Inquiries

A significant portion of clients are worried about potential changes to the lifetime allowance, with 73 percent expressing concerns about its potential abolition. Nearly half of the respondents are apprehensive about modifications to inheritance tax regulations. Other prominent issues include adjustments to the pension tax-free lump sum, strategies for passing on wealth to family members, and alterations to trust structures.

Faye Church, senior financial planning director at Rathbones, stated, “The findings highlight the heightened anxiety among clients as they seek clarity and reassurance in an evolving financial landscape.” She noted that discussions around reversing the pension lifetime allowance abolition have largely gone unnoticed, while potential changes to the tax-free pension lump sum dominate Budget-related conversations.

Advisers Facing Challenges

This influx of complex inquiries has presented challenges for advisers, who struggle to clarify rules in a comprehensible manner. Nearly 80 percent of IFAs reported that simplifying explanations for clients is increasingly difficult, with 74 percent feeling overwhelmed by the rapid pace of potential legislative changes.

Some advisers have found it necessary to intervene to prevent clients from making impulsive decisions, recalling that many who acted hastily before last year’s Budget expressed regret. According to Rathbones, approximately 30 percent of individuals regretted their tax-free lump sum withdrawals, following speculation that capital gains tax (CGT) rates might be increased to align with income tax rates.

In a related finding, a freedom of information request by Evelyn Partners revealed that the total amount withdrawn from UK pensions as tax-free lump sums surged over 60 percent in the 2024/25 financial year, reaching £18.1 billion, up from £11.25 billion the previous year.

As the Budget approaches, both clients and advisers navigate a landscape filled with uncertainty, underscoring the importance of informed decision-making in financial planning.