Wealth transfer among baby boomers drives increase in investments, reports Quilter
Quilter Embraces Innovative Strategies to Navigate Increasing Wealth Transfers
In response to the growing trend of generational wealth transfers in the UK, driven by changes in inheritance tax (IHT) rules, Quilter has announced a strategic shift in its approach.
The company, which manages £126.3bn in assets, has identified the need for innovative financial instruments to help families navigate the complexities of IHT. One such instrument is the onshore bond, a versatile and tax-efficient vehicle for wealth transfer and IHT mitigation.
Quilter reports a significant increase in adviser recommendations for onshore bonds since the October 2024 Budget, reflecting their growing role in inheritance and tax planning. Onshore bonds offer tax deferral, control over asset disposition, and when structured properly, can be assigned to beneficiaries in a tax-efficient manner, often outside of clients' estates for IHT purposes.
Another strategy being advocated by legal and wealth planning experts is the shift from traditional discretionary trusts towards Family Investment Companies (FICs). FICs offer more structural control and can help families adapt to the new Business Property Relief (BPR) rules by holding and managing assets within a corporate framework rather than trusts alone. This structural adaptation is framed as offering more flexibility and sustainability for family wealth stewardship amid tightened inheritance tax reliefs.
Quilter is also focusing on education and awareness as key challenges, as many families still remain unaware of how these financial instruments can be leveraged effectively in inheritance planning.
In addition to these strategic moves, Quilter has reported a strong financial performance. Revenue grew by 2% to £337m, total assets under management and administration increased by 6% to £126.3bn, and the operating margin improved by 1 percentage point to 30%. The affluent arm of Quilter delivered core net inflows of 9%, while the high net worth arm recorded net inflows of 3%. Quilter's adjusted profit increased by 3% to £100m.
Discussions are now focused on the implementation of a likely remediation programme for Quilter, following an investigation by the Financial Conduct Authority (FCA) into whether Quilter is delivering all services it is charging for.
Quilter has maintained its expectations for the full year, and the interim dividend increased by 18% to 2.0p per share. Shares of Quilter rose 3.12% to 169p in early morning trading.
[1] Source: The Telegraph, 2022 [2] Source: FTAdviser, 2023 [3] Source: Quilter, 2023 Q2 Results [4] Source: Citywire, 2023
- Quilter's strategic shift includes the use of innovative financial instruments, such as onshore bonds, to help families with wealth transfers navigate complexities like inheritance tax.
- Legal and wealth planning experts suggest a shift from traditional discretionary trusts to Family Investment Companies (FICs) for more structural control and flexibility in adapting to new Business Property Relief (BPR) rules.
- Amidst discussions for a potential remediation program, Quilter continues to focus on its strength in managing assets, showing a 3% increase in adjusted profit and reporting strong financial performance in the 2023 Q2 results.
