In today’s increasingly complex world, here are 4 reasons why strong collaboration between financial planners and solicitors is more important than ever

In a rapidly evolving world, your clients face increasingly complex challenges. Longer life expectancy, shifting legislation, higher divorce rates, and rising property prices have all contributed to a more challenging financial landscape.

Addressing these issues requires not only highly skilled and qualified financial planners but also collaboration between professionals with complementary expertise.

By working collaboratively, solicitors and financial planners can help ensure clients receive the advice they need to navigate today’s complex world effectively.

Read on to discover four reasons why strong collaboration between financial planners and solicitors is more important than ever.

1. Increasing life expectancy

As life expectancy continues to rise, so too does the number of people living in ill health.

Data from Statista reveals that life expectancy in the UK increased by nearly a decade between 1970 and 2020. While this is undoubtedly a sign of an increasingly healthy society, it also comes with a rise in the number of people with age-related illnesses, such as dementia.

The Alzheimer’s Society estimates that 982,000 people in the UK are currently living with dementia, and projects that this figure will rise to 1.4 million by 2040.

This trend will likely drive a significant rise in the demand for social care, making estate planning more important than ever – particularly following the government’s recent decision to scrap social care reforms.

Financial planning can play a crucial role in ensuring your clients’ estate planning remains efficient under these circumstances. This may include saving for care fees in advance, having sufficient liquidity to cover the costs, or managing assets to help protect their estate from being eaten up by the cost of care.

Moreover, the growing prevalence of age-related illnesses such as dementia also raises the importance of registering a Lasting Power of Attorney (LPA).

Solicitors are integral in the LPA registration process, ensuring that all documentation is accurate and legally compliant. Financial planners can help make sure clients’ wishes are clearly documented and efficiently structured to enable a smooth transition of responsibilities.

So, as life expectancy rises, solicitors and financial planners are increasingly important, and collaboration between the two professions can help ensure our clients are best supported.

Financial planners can refer clients to solicitors for legal processes, such as registering LPAs. Meanwhile, solicitors can refer clients back to financial planners to help mitigate the financial strains of increased longevity.

2. Higher divorce rates

Recent decades have seen a significant rise in the prevalence of divorce, which is another area in which the collaboration between financial planners and solicitors is particularly valuable.

Data from the UK Parliament reveals that the number of divorces rose sharply from 50,000 per year in 1971 to 150,000 a decade later.

Although the recent number of divorces has steadily declined, this may be more a reflection of fewer marriages being registered rather than a trend toward more enduring unions. Currently, there are approximately two marriages for every divorce annually in the UK.

Higher divorce rates have wide-ranging financial implications, including the division of property, pensions, and other assets. And for the partner who loses a larger amount in the settlement, rebuilding wealth and financial stability becomes a key challenge.

Financial planners can be integral in this process, as they can help clients navigate the financial complexities of divorce, including assessing the long-term impact of asset division on retirement savings, investments, and lifestyle.

By using cashflow modelling, a financial planner can help the divorcing couple map out their financial futures, which could help them reach a settlement based on pragmatic solutions rather than emotions.

They can also develop strategies to rebuild financial independence and their guidance on pension sharing or offsetting arrangements can help ensure a fair outcome for both parties.

Solicitors, meanwhile, can play a key role in managing the legal aspects of divorce. For instance, you may be called upon to draft and negotiate settlements that protect your clients’ interests, or mediate disputes if the divorcing parties can’t come to an agreement.

3. Rising property prices

Property prices have rapidly increased in recent years, which has significant financial implications for estate planning.

Higher property values push more estates above the Inheritance Tax (IHT) threshold, making effective planning essential to minimise tax liabilities and preserve wealth for future generations.

This has also contributed to a rise in disputes over wills. According to the Guardian, 10,000 wills are challenged each year, and this number is expected to grow.

A key factor behind this trend is the ageing boomer generation, many of who own property that has appreciated dramatically over the years, resulting in estates of substantial value. Disputes often arise from unclear or outdated wills, unequal distributions, or family tensions exacerbated by the financial stakes involved.

Financial planners can help clients structure their estates efficiently to minimise tax exposure and ensure that assets, including property, are distributed according to their wishes. They can offer strategies for releasing equity from properties to fund care costs and advise on gifting to reduce IHT.

As solicitors, you can assist with drafting clear and legally sound wills that reflect your client’s intentions and are less susceptible to challenges. You can provide expertise in navigating some of the legal nuances of estate planning, such as creating trusts.

Furthermore, when disputes arise, you may be called upon to mediate conflicts or represent clients in legal proceedings to achieve fair resolutions.

4. Changing tax legislation

Tax legislation is constantly changing and evolving, and it is always helpful for financial planners and solicitors to collaborate closely to ensure the best outcomes for clients in light of shifting policies.

Recent reforms to IHT and pensions represent just the latest in a long series of legislative changes that have reshaped financial planning. You can read more about this in our previous article on the topic.

These reforms, along with adjustments to Capital Gains Tax, emphasise the need for expert guidance in navigating the changing regulatory landscape.

Pensions legislation, in particular, has undergone significant transformation over the years. From the removal of the Lifetime Allowance to amendments to the Annual Allowance, it has become more complex to efficiently manage pension contributions and withdrawals.

Financial planners can work with clients to adapt their strategies in response to these changes, ensuring their retirement plans and pensions remain tax-efficient.

Solicitors can help by advising on the legal structures needed to implement these plans effectively, such as by drafting trust deeds or updating wills in line with changing tax rules.

Get in touch

To find out more about how we can work together to help our clients amid an increasingly complex world and financial landscape, get in touch.

Email info@fbwealth.co.uk or call us on 0333 1122211.

Please note

This article is for general information only and does not constitute advice. The information is aimed at retail clients only.

A pension is a long-term investment not normally accessible until 55 (57 from April 2028). The fund value may fluctuate and can go down, which would have an impact on the level of pension benefits available. Past performance is not a reliable indicator of future performance.

The tax implications of pension withdrawals will be based on your individual circumstances. Thresholds, percentage rates, and tax legislation may change in subsequent Finance Acts.

The Financial Conduct Authority does not regulate estate planning, tax planning, trusts, Lasting Powers of Attorney, or will writing.

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