Wealth preservation, inheritance tax and the new higher rate income tax are the top three concerns for independent financial advisors and their clients for the year ahead, says a new survey by Stellar Asset Management.

The Stellar Asset Management wealth management survey was completed by 85 IFAs, the majority of which (74 per cent) stated that wealth preservation was the most common concern for their clients. Advisors, meanwhile, think clients have their priorities right, as they cited it most frequently as the issue clients should be most concerned about.

Feeding into concerns about wealth preservation, inheritance tax was ranked as the second most important issue by advisors, with 80 per cent of those surveyed saying tax mitigation products and services are now of more interest to clients than in the past.

Meanwhile, 98 per cent of advisors stated that the new top rate of income tax was worrying clients. 

“With wealth preservation, higher rate income tax and inheritance tax front of mind for both advisors and their clients, established tax mitigation products... should be centre stage in 2010. We would expect greater demand for these products, not just in terms of volume, but also in terms of what they offer clients,” said Gordon Pugh, sales and marketing director at Stellar.

Transparency of charges, simplicity of products and flexibility of the terms by which clients could access their capital would be key, said Mr Pugh, adding that the firm had launched the Stellar Asset Management AIM inheritance preservation service, which seeks to mitigate inheritance tax and grow assets over the medium to long term, with these requirements in mind. 

However, while IFAs are well placed to deal with these issues and provide guidance to clients, it will also be increasingly important to ensure products are not seen to be taking advantage of legitimate tax loopholes, said Mr Pugh.

“It is worth noting that these established products will also need to have the spirit – rather than letter – of the HMRC rules in mind if they wish to retain their favourable tax status. The public coffers need cash and HMRC are likely to get very strict with anyone they feel is playing fast and loose with legitimate tax mitigation products,” he said.