Close to two thirds of accountants consider talking openly about money as important to their financial wellbeing

Close to two thirds (64%) of accountants believe that having open conversations with family about money is integral to their financial wellbeing, according to a survey by wealth manager Rathbones.

Rathbones’ research looked into the state of High Net Worth Individual’s (HNWI) and professional’s top financial wellbeing concerns. Discussing financial issues is of high importance to many accountants in maintaining their wellbeing.

While the topic of money remains a difficult topic of discussion for many, whether it’s about money management, inheritance, or broader wealth decisions, encouragingly 73% of accountants are confident in their current ability to talk to loved ones on the subject.

While the nation grapples with economic concerns such as long-term high inflation and geopolitical instability, 61% of accountants said that providing financial support for their family was of importance to them, with 77% confirming that they are doing this currently. 86% said having clarity and confidence over their future financial plans was important to them, yet 73% said that they felt they were achieving this at the moment.

Overall, accountants are predominantly optimistic about their future finances in 2024, scoring on average 6.5 out of 10 on Rathbones’ financial wellbeing scale. That said, when looking ahead to 2024, accountants did also show concern in a few areas, including a long-term rise in inflation (44%), geopolitical instability (35%), and potential changes to taxation (18%).

“Understanding how best to and when to start preparing to pass on wealth is a key financial planning consideration, and no-one will know this better than an accountant,” says Olly Cheng, Associate Director at Saunderson House, part of Rathbones Group.

“While many are already offering financial support to families, having the peace of mind that your family is also taken care of is also very important. Having conversations early with your family with a financial planner can help you to address any elephants in the room and ensure everyone is on the same page.”

Tips on passing on wealth

Use your pension wisely

From the age of 55 you can usually take up to a quarter of your pension savings as a tax-free lump sum and this can be useful for parents looking to help their children with a house deposit, big purchases or to help them set up savings for their future.

However, before accessing your pension you’ll want to think about the impact this might have on your future finances. There’s little point giving a significant sum away, if it means you’ll be left financially vulnerable and potentially a burden on your loved ones in the future. Working with a financial planner will help you to understand how much you could afford to share now, without compromising on your own retirement plans.

Also consider how you might be able to boost your retirement savings too. This will mean you have a larger base to start from. One way to do this could be by increasing your national insurance contributions to make up for any gaps in your employment history thereby maximising the state pension you will receive. Every little helps, and the more you have in your pot, the more you will be able to support your loved ones.

Gift tax efficiently

Gifting can be a useful and tax-efficient way to support your dependants instead of waiting to pass on your wealth on death. For smaller gifts you can gift up to £3,000 per year tax-free, and there are also additional allowances for money given as wedding presents.

Be aware though that  by gifting money directly you will lose control over how the money is spent. However, you can help them set up long term savings, either through a tax efficient Individual Savings Account (ISA) or pension, or both, which may encourage your children to save. If you’d prefer to have some say over the money and how it is used, you could consider putting the money into a Trust for the benefit of your loved ones instead.

Review your investments

They say a watched pot never boils, but it is important to review your finances regularly and make sure that they are working as hard as possible for you. Ensure that your investments are geared to do what you want them to do. This will mean assessing the amount of risk you are currently taking and making any adjustments where appropriate.

Assessing your pension is also critical. For many in their 50s, their pension may have been invested in a ‘lifestyle fund’. This used to be a popular choice as the fund would automatically reduce its risk exposure as you grew older, helping to preserve the value of the pension as you get closer to pension age. This would then often be used to purchase a guaranteed level of income in retirement, also called a lifetime annuity.

However, the introduction of pension freedoms has given greater flexibility to pension saving, meaning more flexible strategies are now available which may be more appropriate. This is because your pot may be invested for much longer than previously imagined. A financial planner will be able to help you to understand your options at retirement, risk profile and how this applies to your pension and other investments as well as your future expenditure needs.