Almost nine in 10 (88%) advisers and 86% of paraplanners believe that tax wrapper decisions have become more complex in the past three years, new research by AJ Bell has revealed.
AJ Bell’s Great Wrapper Research report is based on the responses of 350 financial advisers and 150 paraplanners in the UK and forms part of the investment platform’s Great Wrapper Reset campaign.
The report found that the decision by successive governments to reduce various tax-free allowances and increase rates, as well as bring unused pensions into the scope of inheritance tax from April 2027, has created an increasingly complex tax environment.
While tax wrapper choice has never been a one-size-fits-all approach, the report argues that the decision process is in need of a reset, particularly when it comes to intergenerational wealth transfer.
According to AJ Bell, eight in 10 (79%) advisers said they would use a wrapper decision framework if one existed.
Charlene Young, head of technical at AJ Bell, said: “The Great Wrapper Reset has already begun. An ever-changing tax and regulatory environment that shows no signs of slowing down has forced advisers to reconsider approaches and challenge past assumptions on how clients draw income from their wealth in retirement.
“The fact almost nine in 10 agree wrapper decisions have become more complex shows this reset is something the entire industry must recognise, and providers need to be on hand to support advisers and clients with navigating those decisions.
“Financial advice has never been more important, and more and more clients will be turning to their advisers on tax and estate planning to provide them with peace of mind that they will be able to both access and pass on their life savings as tax efficiently as possible. But advisers can only do this effectively and feel good about advising if they have the right tools and support from providers.”
AJ Bell’s Great Wrapper Reset resource hub is offering a practical wrapper reset framework alongside a range of support for advisers when making wrapper decisions. This includes tips for effective wrapper conversations developed in partnership with behavioural science firm Cowry to ensure advisers are equipped to help clients make good decisions.
The firm plans to run a ‘Great Wrapper Reset’ tour in September across 10 locations, addressing the findings of the report with practical tips for advisers.
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