1. Adviser Business Insights
Wealth Preservation Strategies
[September 2012]
IHT and Estate Planning

2. Foreword With all best wishes for your success. Tony Wickenden
Tax and tax planning has been very much in the news this year... but the focus has been predominantly on income tax and income tax avoidance. And it's not surprising. Income tax is the tax that most immediately affects our financial well being, so avoiding it, especially when "it" can remove 40-50% of what you earn for your endeavours or investment, is desirable. Generally speaking, next in the hierarchy of tax planning is capital gains tax – an "event based"
tax, but one that is also directly suffered by the tax payer. And then there's inheritance tax.
IHT and estate planning represents, we believe, a real opportunity for advisers to deliver insight, advice and value to their clients – especially their higher net worth older clients (an increasingly important demographic).
We believe that IHT and estate planning incorporates some of the key characteristics of a market that offers advisers the opportunity to deliver real value in a post RDR world. It's one of the more technically demanding areas of financial planning but that's what makes it all the more appealing to advisers prepared to invest the time in acquiring, maintaining and developing the relevant competencies to deliver the insight, guidance and advice that clients would value.
This, in turn, offers providers and platforms with appropriate IHT and estate planning solutions an excellent opportunity to be the partner of choice for IHT and estate planning professionals. It follows, we think, that understanding how advisers think and act currently in relation to IHT and estate planning is essential to providers and platforms looking to maximise the mutual benefit in this important advice-centred market.
Given the size of the advice gap around appropriate IHT and estate planning solutions that this research has identified, along with the diverse (and frequently unmet) support needs advisers have articulated, the opportunity is sizeable. We believe that this research can play a significant role in helping providers and platforms fully leverage this opportunity. We hope you agree.
With all best wishes for your success.
Tony Wickenden
Jt .Managing Director
Technical Connection limited
Phil Wickenden
Managing Director
So Here’s The Plan limited e: m: e: m:

3. Objectives 3
In every edition of our Adviser Business Insights (“TCABI”) we address, in detail, a specific market/business opportunity and explore how advisers and providers can work more collaboratively to better exploit them.
This edition we have focussed on...
IHT & Estate Planning: Wealth preservation strategies:
Speaking to advisers in depth we have explored in detail:
What proportion of an adviser’s client base is “IHT Planning” appropriate
The level of importance of IHT planning to advisers and their clients
Adviser current and desired activity levels in this market
Which packages or plans (e.g. loan trusts, DGT) stand out or have the widest use
The challenges, or improvements that could be made
The role (and extent of use of) protection in IHT Planning
Estate Planning and pensions
What works and what doesn’t in relation to provider/platform support
What provider support and business generation is like
What is needed to drive more business and what providers could do to help this 3 3

4. Methodology 4
100 advisers were randomly sampled from a robust panel of 800 Technical Connection adviser clients and over 5,000 advisers from So Here’s The Plan’s growing database.
The sample comprised advisers who are:
Nationally representative sample of nationals, networks, regionals and single outlet firms
Substantially PFS/IFP members
& QCF 4 qualified (minimum)
From fee charging businesses
Active (or actively planning to be) in IHT / Estate planning.
All interviews were conducted by telephone or face to face, lasting between minutes.
Interviews were conducted during July / August 2012.
Participating advisers were offered access to online client facing material from Technical Connection in return for their participation.
Individual anonymity agreed. 4 4

5. Contents Section 1: Planning context Section 5: Support imperatives
3.2 Level IHT discussions with clients vs. execution
3.3 Expected change in discussions / execution
3.4 Drivers of change
3.5 Size of the potential market
3.6 Understanding market resistance
3.6 Overcoming barriers
3.7 Implications and opportunities
Contents
4.1 Perceived provider commitment
4.1 Which providers / platforms do advisers associate most strongly with IHT / estate planning.
4.2 Drivers of positive association.
4.3 Most valued support – measurement of the importance of 10 key support areas:
4.2 Breadth of solutions (provider / platform)
4.2.1 Who stands out & why
4.3 Technical updates
4.3.1 Who stands out & why
4.4 Websites
4.4.1 Who stands out & why
4.5 IHT training & events
4.5.1 Who stands out & why
4.6 Business generation support
4.6.1 Who stands out & why
4.7 Consultant capability
4.7.1 Who stands out & why
4.6 Marketing material
4.7 IHT planning tools
4.8 Leveraging opportunities
4.8.1 What providers / platforms can do better
4.9 Final thoughts – implications & opportunities 5
Section 1: Planning context
Section 5: Support imperatives
1.0 IHT & Estate planning in context
1.1 Sample detail – size of firm (across brackets)
1.2 Sample detail – AUM (across wealth brackets)
1.3 Posts RDR business model intentions (and drivers)
1.4 Estate sizes of clients (across brackets)
1.5 Total investable wealth of clients
1.6 Expected change in client profile / asset sizes
1.7 Financial reviews – frequency and make-up
1.7 Use of paraplanners in advisory businesses
1.9 Biggest adviser business challenges
1.10 Overcoming barriers
1.8 Implications and opportunities
2.0 IHT & estate planning challenges
2.1 The importance of IHT planning
2.2 IHT / Estate planning’s role presently
2.3 Expected change in the role of IHT planning
2.4 Key drivers of change
2.5 Professional Connections (% of business from)
2.6 Changes in the role of professional connections
2.7 Implications and opportunities
4.0 Under the bonnet
4.1 Underlying assets used for estate planning solutions
4.2 Investment product / trust combinations
4.3 Protection in trust
4.3.1 Protection in trust – use and perceived relevance
4.3.2 Protection in trust – exploiting opportunities
4.4 BPR portfolios
4.4.1 Consideration vs. implementation
4.5 Family Investment Companies
4.5.1 Consideration vs. implementation
4.6 Family Limited Partnerships
4.6.1 Consideration vs. implementation
4.7 The role of registered pension schemes
4.7.1 including planning with bypass trusts
Section 4: Estate planning solutions
Section 2: The challenges
Section 3: Meeting client needs
3.0 IHT / Estate planning advice gap
3.1 Perceived demand for IHT / estate planning
4.8 Adviser business opportunities
4.9 Implications and opportunities

6. Section 1.
IHT and Estate Planning in context

7. Section by section guide
IHT & estate planning in context
The challenges
Better meeting client needs
Estate planning solutions
Provider / platform imperatives 1 2 3 4 5
Sample detail – size of firm (across brackets)
Sample detail – AUM (across wealth brackets)
Posts RDR business model intentions (and drivers)
Estate sizes of clients (across brackets)
Total investable wealth of clients
Expected change in client profile / asset sizes
Financial reviews – frequency and make-up
Use of paraplanners in advisory businesses
Biggest adviser business challenges
Overcoming barriers
Implications & opportunities
The importance of IHT planning
IHT / Estate planning’s role presently
Expected change in the role of IHT planning
Key drivers of change
Professional Connections (% of business from)
Changes in the role of professional connections
Implications and opportunities
Perceived demand for IHT / estate planning
Level IHT discussions with clients vs. execution
Expected change in discussions / execution
Drivers of change
Size of the potential market
Understanding market resistance
Overcoming barriers
Implications and opportunities
Underlying assets used for estate planning solutions
Investment product / trust combinations
Protection in trust – use and perceived relevance
Protection in trust – exploiting opportunities
BPR portfolios
Family Investment Companies
Family Limited Partnerships
The role of registered pension schemes
Biggest adviser business opportunities
Implications & opportunities
Perceived provider commitment to IHT / estate planning
Drivers of positive association.
4.3 Most valued support – measurement of the importance of 10 key support areas vs. provider / platform performance in each:
Breadth of solutions (
Technical updates
Websites
IHT training & events
Business generation support
Consultant capability
Marketing material
IHT planning tools
Leveraging opportunities
What providers / platforms can do better
Final thoughts

8. Section 1: IHT & estate planning in context
The challenges
Better meeting client needs
Estate planning solutions
Provider / platform imperatives 1 2 3 4 5
Most advisers begun the transition some time ago and have what they believe are the fundamental pieces of their charging structure and advice proposition in place (though most accept it won’t be the finished picture).
While 75% intend to remain independent, a far larger proportion of National firms and network members will be offering restricted proposition to at least some clients (nationals in particular may look to a hybrid model).
Most will be offering tiers of service, driven by assets under management, with those qualifying for tier one receiving fairly unlimited access, pro-active adviser support.
As this shift to a higher level of service delivered to a smaller group of wealthier clients continues the role of paraplanners is becoming more prominent and influential in the selection of provider and solution.
But while a proportion echo sentiments expressed widely in the trade press about aspirations to move up the food chain, focusing only on those clients with over £100k investable assets, only a third of our sample are expecting to see active growth in the upper echelons of their client wealth brackets.
Despite being on the whole fairly sanguine about post RDR prospects the challenges of RDR, taxation and wider regulation remain at the forefront of advisers’ minds. They continue to adapt to the evolving terrain but remain hopeful, rather than certain, of their place in the financial advice chain.

9. Median of 2.5 RIs per business
Sample detail – size of firm 9
Q: How do you define your business?
65% of advisers interviewed were from single outlet business
20% were network members
9% were from businesses with RIs in two or more regions
6% were from National advisory businesses (defined as having a turnover of £5m or more than 10 outlets)
Q: How many Registered Individuals are there in your business?
While overall the average number of RIs in the businesses we spoke to was 22, the median number was only 2.5, highlighting the level of variance.
One business comprising more than 1,500 advisers heavily skews average figures.
Median of 2.5 RIs per business
50% of the sample has no more than two RIs
24% have 3-5 RIs
12% have 6-10 RIs
6% have RIs
Only 5% have over 5RIs 9 9

10. Sample detail – Assets under management10
Total average assets under management of all advisers we spoke to are £131m with the median value at £50m
National IFA businesses averaged £1bn assets under management.
Network members had an average of £58.3m, though the median value was far lower on account of a high degree of variance.
While 27% had AUM over £100m, 45% have AUM under £15m.
All Regional firms we spoke to had AUM over £150m.
Average AUM was £525m.
The lowest was £150m.
Highest AUM for regional businesses we spoke to was £1bn
Single office IFA businesses we interviewed had an average £36m AUM.
27% had AUM under £5m
28% had AUM over £50m.
National
Network
Regional
Single outlet
Q. What are your total assets under management? 10 10

11. Post RDR business models11
Q. What model will you adopt post RDR?
While 75% of IFAs intend to remain independent, nationals and network members are far more likely to consider restricted options
IFA business
Post RDR
Nationals
All national advisory businesses we spoke to intend to adopt a restricted, whole of market offering.
Network members
Network members also have a far higher propensity to consider restricted models, with 45% intending to become restricted (within a multi-tied arrangement).
46% intend to remain independent.
Regional IFAs
89% of regional IFAs intend to remain independent post RDR.
11% are considering a restricted whole of market option.
Single outlet firms
84% of IFAs from single office businesses intend to remain independent .
13% intend to be restricted (whole of market)
3% will become restricted multi-tied. 11 11

12. Post RDR business models – independence drivers12
Independence
There are three (often interlocking) things that are driving advisers’ decisions to remain independent post RDR
IFA s more comfortable with it
Advice perceived as better
(Expected) client preference
A third of advisers, having considered FSA guidance, instinctively feel that independence will be the better option and that they will be able to navigate requirements. Though many accept that they may well review decisions.
A fifth of advisers believe that independence simply offers the best quality advice and want to build a model around the highest value proposition.
A significant minority believe that independence (as defined by the FSA) is what clients want. That said, many of those that hold this assertion do so based on expectation rather than anything more robust.
33%
20%
20% “
We kind of always have been and we have a broad spectrum of businesses we operate with. We feel we can work within the independent definitions as the nature of advice we give covers all areas. “
It's what our clients expect. We also do a lot of work with solicitors and accountants and it's what they would expect. “
I believe it is the most appropriate way to give truly unbiased advise to our clients.
YOU CAN'T GIVE THE BEST ADVICE IF YOU'RE NOT INDEPENDENT.
I value it personally and I think my clients will value that I am truly independent. ” ” ” “ “
Because I favour it personally; the 'independent' tag is attractive to customers. “
It's something we want to preserve and maintain even though it will be easier to be something else ” ” ” “
Because I want to remain fiercely independent. It's a good idea to treat the client relationship as primary and nothing else matters “ “
Because we've always been IFA's and we see no reason to change ” ” ”
While the noise emanating from the trade press tells of a widely-held belief that the FSA has not done enough to clarify its RDR rules around independence, more advisers have come to terms with this fact and have got on with building what they believe are fairly robust fee propositions in spite of the information dearth.
Questions over the nuances of trail persist (particularly in relation to switches), and advisers appreciate that further tweaks will be required as 2013 unfolds, but there is not the disquiet there once was. 12 12