Wealth transfer has emerged as a priority issue for advisers in response to the government's proposed tax changes announced in the Autumn Budget, research from Schroders has found.

Schroders’ latest UK Financial Adviser Pulse Survey revealed that 92 per cent of advisers had held conversations with clients following the Budget announcement that unused pension assets would be included in estates for inheritance tax, with gifting the most discussed strategy.

Nearly half (47 per cent) of the advisers surveyed believed that more than half of their clients would need an update to their financial and retirement plans prior to the proposals being introduced in April 2027.

The most commonly discussed strategies with clients relating to the proposals were increasing withdrawals to then gift out of normal expenditure (81 per cent) and changing the order in which assets are drawn down from tax wrappers (75 per cent).

Retirement planning in response to the proposals had also resulted in 84 per cent of advisers engaging with clients about the suitability of annuities compared to drawdown.

Investment sentiment

Schroders’ survey was conducted amid market volatility driven by ‘Liberation Day’ and found that the proportion of clients feeling bearish had risen from 18 per cent in November 2024 to 43 per cent, while the proportion feeling bullish had fallen to just 10 per cent.

Almost two-thirds (64 per cent) of advisers expected market volatility to increase, up from 43 per cent in November 2024, while the proportion forecasting lower global growth rose from 8 per cent to 24 per cent.

Expectations for higher geopolitical disruption had risen to 77 per cent and 55 per cent anticipated an increase in deglobalisation.

Looking at clients’ primary concerns, 81 per cent of advisers cited capital loss as their top worry, up from 49 per cent in November 2024, which Schroders said highlighted critical role of advice and active management.

More than a third (39 per cent) of advisers noted that some clients had adjusted their financial plans in response to changes in the economic and market landscape since the inauguration of President Trump.

AI and regulation

Adviser sentiment towards artificial intelligence (AI) was found to be improving, with 82 per cent now seeing AI as an opportunity rather than a threat to their business, up from 57 per cent in May 2023.

Furthermore, the proportion of advisers who said they would never use AI had fallen from 27 per cent to just 7 per cent during the same time period.

Over a third (37 per cent) of advisers had already adopted some form of AI technology, up from 21 per cent in November 2024, with 75 per cent stating that the greatest benefits of AI are in efficiency and automation.

When asked about the implementation of Consumer Duty, 33 per cent of advisers continued to identify that the assessment of fair value using client feedback remains their first priority to address.

Nearly two thirds (62 per cent) of advisers believed that the fair value outcome of the Consumer Duty will exert pressure on ongoing charging models.

“The survey provides a snapshot of how clients and advisers are responding to the current environment, with the latest market volatility a key influence,” commented Schroders head of UK wealth, Jamie Fowler.

“Recent data has shown that the fall in markets in April was erased by the rebound, showing how crucial it is to stay calm and remain invested.

“At Schroders we are firm believers in the value of advice and active management. The role of an adviser is thereby crucial in providing the expertise needed to help clients grow wealth in the long run while navigating short term volatility and ensure their peace of mind.”

Benchmark commercial director, Gillian Hepburn, added: “The Autumn Budget proposals to include unused pension funds as part of the estate for inheritance tax has turbo charged conversations with clients, not just about pension retirement funding but their broader financial plan.

“This includes increasing conversations around gifting and helping clients to understand the optimum time to transfer assets to the next generation.

“The Schroders UK Financial Adviser Pulse Survey has tracked wealth transfer for many years but, with 92 per cent of advisers having conversations with clients about this, are we finally at an inflection point?

“Financial planning businesses like Benchmark have a significant role to play when working with clients to explore the range of options available and also to ensure that advisers have the appropriate proposition and also the soft skills required for what can often be difficult family conversations.”

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