Old Mutual International, part of Quilter, carried out a survey of 180 financial advisors from across the UK, Europe, the Middle East and Asia.

According to new research, financial advisors believe there are three significant barriers to offering a trust solution to their clients.

Old Mutual International, part of Quilter, carried out a survey of 180 financial advisors from across the UK, Europe, the Middle East and Asia.

The research found that around 28 per cent of advisors believe that their clients avoid trusts because they are too complicated and they do not understand them. This was the biggest barrier. However, due to the fact that trusts can significantly reduce a person’s exposure to inheritance tax and also ensure that the right people get the right proportion of assets at the right time, they give advisors the opportunity to demonstrate the value of advice – which is something that 60 per cent of advisors believe others in the industry find difficult to do, according to the research.

Some 25 per cent of advisors believe that clients avoid trusts because they don’t offer enough control. When assets are placed in trust, legal ownership passes to the trustees who then have responsibility for managing and distributing the trust fund to the beneficiaries. However, trusts do not have to be seen as a loss of control, rather they are legal arrangements made by clients with trustees who determine how beneficiaries are to be looked after. Clients are, in essence, taking control to protect wealth for their beneficiaries.

Lastly, 17 per cent of advisors say that clients avoid trusts because they do not know how much capital they will need in later life; this is due, for example, to increases in life expectancy and uncertainty over care costs. However, the types of trusts available in today’s market can help reassure customers by building in flexibility to access funds in the future.

Rachael Griffin, head of trusts and technical solutions at Quilter, said: “Through good financial planning and the use of trusts, it is possible to mitigate the impact of inheritance tax. Modern trusts are about transparency, fairness and simplicity. They ensure the right people receive the right amount of money at the right time, something which has become even more important in today’s complex family structures. While this research highlights the potential concerns of clients, these can all be mitigated through greater understanding and knowledge of the full range of trust solutions now available. Trusts remain a cornerstone of financial planning, and are a great way for advisers to demonstrate the value of their advice to their clients.”