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 regarding potential tax changes has led to heightened concerns among clients, prompting a significant uptick in demand for financial guidance. Analysis from wealth management firm Rathbones reveals that 90 per cent of independent financial advisers (IFAs) have reported an increase in client inquiries, driven largely by fears surrounding tax rises and changes to pension regulations.

Of those surveyed, nearly one-third noted a surge in inquiries ranging from 26 per cent to 50 per cent, while two-thirds reported increases of 11 per cent to 25 per cent. The Chancellor’s challenge to address a £20 billion fiscal shortfall without raising taxes on “working people” has intensified client anxiety. Concerns are particularly focused on potential changes to the lifetime allowance, with 73 per cent of advisers indicating that clients are worried about its abolition. Nearly half of those surveyed also expressed fears regarding changes to inheritance tax and the tax-free lump sum from pensions.

Advisers Struggle to Clarify Complex Tax Landscape

Faye Church, senior financial planning director at Rathbones, emphasized the growing unease among clients seeking clarity in a rapidly changing financial environment. “The findings highlight the heightened anxiety among clients as they seek clarity and reassurance in an evolving financial landscape,” Church stated. She pointed out that while speculation about reversing the pension lifetime allowance abolition has gained little attention, discussions about potential changes to the tax-free pension lump sum have been prevalent.

As advisers grapple with these complex issues, they face challenges in simplifying the rules for clients. Almost 80 per cent of IFAs reported that explaining these regulations in accessible terms is becoming increasingly difficult. Furthermore, 74 per cent of advisers found themselves racing to keep up with the legislative changes that are anticipated as the Budget approaches. This uncertainty has led some advisers to caution clients against making hasty decisions, particularly in light of previous experiences where clients regretted their actions.

Last year, a considerable number of clients who withdrew their tax-free lump sums did so in response to speculation about changes to capital gains tax (CGT) rates. According to Rathbones, nearly 30 per cent of these clients expressed regret over their withdrawals.

Pension Withdrawals Rise Amid Uncertainty

A recent freedom of information request from Evelyn Partners to the FCA revealed that the amount withdrawn from UK pensions in tax-free lump sums surged by more than 60 per cent in the 2024/25 financial year, reaching £18.1 billion, up from £11.25 billion the previous year. This dramatic increase underscores the impact of economic speculation on consumer behavior and highlights the necessity for clear communication between advisers and their clients.

As the Budget date approaches, financial advisers are bracing for continued demand as clients seek guidance amidst a backdrop of uncertainty. The landscape remains complex, and as clients navigate their financial futures, the role of IFAs in providing clarity and insight becomes increasingly vital.