Ian

Since targeted support was confirmed, most of the discussion has focused on what it is and who can offer it. The conversations we’ve been having have been slightly different. They’re about what happens when a firm starts delivering targeted support alongside full regulated advice.

 

Two kinds of recommendation, one client bank

Targeted support isn’t full advice. It doesn’t need the same personal recommendation, and it doesn’t need a suitability report in the way COBS 9.4 requires for regulated advice. That’s rather the point of it, since it’s meant to be lighter touch, quicker to deliver, and available to people who wouldn’t otherwise get anything at all.

But most firms offering it won’t be running two separate businesses side by side. They’ll be running one client bank, where some clients get targeted support, some get full advice, and some get both at different points as their circumstances change.

That’s where it gets interesting from a file perspective, because the client doesn’t experience these as two different regulatory categories with two different standards behind them. As far as they’re concerned, their adviser told them to do something.

 

Where this could go wrong

The most likely failure probably isn’t a firm getting targeted support badly wrong for one particular client. It’s more likely to be a firm building it as a genuinely separate process, run by a different part of the business, with its own assumptions, its own records and its own owner, sitting alongside full advice rather than connected to it.

Six months in, nobody would necessarily notice. A year in, a file review or a client complaint might be what surfaces a case where the segment-level assumption and the client’s actual circumstances had drifted apart somewhere along the way.

That’s not really a targeted support problem specifically. It’s the same lesson firms have already learned from running annual reviews, onboarding and servicing slightly differently across a growing business. Consistency has to be designed in. It rarely happens by accident.

 

The consistency question

If targeted support is built around “people like you” assumptions, and full advice is built around one client’s actual circumstances, a firm needs to be confident the two aren’t pulling in different directions without anyone noticing. A few questions we’ve found useful when working through this with firms:

Would this client have received the same underlying message through full advice?

If targeted support nudges someone toward moving cash into investments, and a full suitability process for a similar client would have paused on capacity for loss, that’s worth catching before it becomes a pattern across the client bank, not afterwards.

Who is checking the assumptions behind the segment, rather than just the individual outcome?

Full advice gets checked file by file. Targeted support, by design, gets checked at the level of the segment and the assumptions sitting behind it, and that calls for a different kind of oversight rather than a lighter version of the one already in place.

What happens at the handover point?

If a client moves from targeted support into full advice, or the other way round, is there a clear record of what they were told, when, and on what basis? That record matters just as much as the suitability report itself.

 

What firms may want to evidence

For firms offering targeted support, or building toward it, a lot of the groundwork looks less like new advice process and more like new governance sitting behind it. That might include evidencing:

•     How a client is identified as belonging to a given segment, and on what data.

•     What assumptions sit behind the segment, and who signed them off.

•     How often those assumptions get reviewed, given they’re being applied to many clients rather than tested against one.

•     What a client is actually told, and how that record is kept, given there’s no suitability report to fall back on.

•     How a firm would spot targeted support and full advice pulling clients in different directions.

•     What happens if a client acts on targeted support and it turns out to be the wrong call for their specific circumstances.

•     Who owns the decision to move a client from targeted support into full advice, and when that trigger should be pulled.

None of that is about slowing targeted support down. It’s about giving the lighter-touch process the same discipline firms have spent years building into suitability files, just applied in a different way.

 

The question I keep coming back to

Targeted support is meant to help more people get useful support, and that’s a genuinely good thing for an industry that has spent years talking about the advice gap. But good intentions and good file evidencing are two different things.

For me, the real work over the next year isn’t building the targeted support proposition itself. It’s the quieter work of making sure it doesn’t drift away from what full advice is telling other clients, and that somebody in the business actually owns keeping the two aligned.

Targeted support is designed to close the advice gap. The firms that deliver it successfully won’t just be the ones that build a proposition. They’ll be the ones that build the governance around it.

Has your firm started thinking through how targeted support will sit alongside full advice, and who owns making sure the two stay consistent?

Further Reading

If you missed the first two editions of Behind Better Advice, you can read them here.

If you’d like to learn more about how we support financial planning firms with suitability consulting, annual reviews and operational support, you’ll find more information here.

When an advice firm starts to feel stretched, the obvious answer is often:

“We need another paraplanner.”

And sometimes, that’s exactly the right decision.

But before you start writing the job description, I think there’s one question worth asking…

What problem are we actually trying to solve?

Because needing more support doesn’t always mean needing another permanent employee.

Recruitment is a big investment. Not just financially, but in the time it takes to advertise, interview, wait out a notice period, onboard someone and help them get up to speed.

We know that first-hand. We’ve been recruiting ourselves recently, and finding experienced paraplanners isn’t always quick or straightforward. Even when you find the right person, there’s still a notice period to work through and time spent helping them settle into the business.

That’s not a reason not to recruit.

It’s simply a reminder that recruitment solves one problem, but it isn’t the answer to every problem.

 

Is it really a capacity issue?

Perhaps the business has grown and there genuinely aren’t enough hours in the day.

If that’s the case, recruiting may well be the right decision.

But sometimes the pressure is temporary.

It might be tax year end.

It might be a maternity leave.

It might be someone handing in their notice.

It might be an unexpected increase in new business.

Or it might simply be that the team needs a bit of breathing space while recruitment is underway.

They’re all slightly different situations, and they don’t necessarily need the same solution.

 

Or is something else causing the pressure?

Sometimes a team feels overloaded because the workload has increased.

Sometimes it’s because the process around the work has become inefficient.

Cases bounce backwards and forwards because something is missing.

Reports sit waiting for approval.

Advisers spend time chasing updates.

Paraplanners end up doing work that could sit elsewhere in the process.

Adding another person might ease the pressure.

But it might not solve what’s creating it.

 

Do you need another person, or different capability?

One of the things I’ve noticed over the past couple of years is that the support advice firms need has become much broader.

It isn’t always about writing another suitability report.

Sometimes it’s an experienced technical sounding board.

Sometimes it’s implementation support.

Sometimes it’s help with annual reviews.

Sometimes it’s improving workflows.

Sometimes it’s simply having extra capacity available when things get busy.

They’re all different challenges, but it’s easy to bundle them together under one sentence:

“We need another paraplanner.”

 

It doesn’t have to be in-house or outsourced

I think this is where the conversation is changing.

The firms we work with aren’t choosing between an in-house team and outsourced support.

Many have both.

They recruit because they want to invest in their business long term.

They bring in external support because they need flexibility, specialist experience or extra capacity while they continue to grow.

One doesn’t replace the other.

Often, they complement each other.

For me, that’s probably the biggest shift I’ve seen over the last few years.

Outsourcing isn’t just about filling a gap anymore.

It’s about giving firms access to capability exactly when they need it.

If your firm suddenly became 30% busier tomorrow, what would your first instinct be?

Would you recruit?

Would you improve your processes?

Or would you bring in some external support while you worked out the best long-term solution?

I’d be genuinely interested to hear how other firms approach it.

For firms weighing up their options, it can help to look at the wider picture rather than treating recruitment as the only answer. That might mean bringing in outsourced paraplanning support for extra capacity, reviewing where process improvements could remove pressure, or using external support for areas such as annual planning reviews while the in-house team focuses on the work that needs their attention most. The right solution will be different for every firm, but having more than one option usually makes it easier to respond without rushing into the wrong decision.

Over the past few weeks, I’ve noticed a real shift in the conversations happening around AI.

Not that long ago, people were asking what it might be able to do.

Now they’re talking about what it’s already doing.

People are comparing different tools, sharing how much time they’ve saved and swapping ideas on everything from meeting notes and task creation to document generation and form filling.

I found myself reading one of those discussions this week and it really got me thinking.

Interestingly, nobody was talking about replacing advisers.

Or technical judgement.

Or suitability.

Instead, they were talking about saving time.

That felt significant.

Because maybe we’ve been asking the wrong question.

Rather than asking whether AI can produce a document, perhaps we should be asking what becomes more valuable once producing the document takes less time.

That thought stayed with me throughout the week, particularly because of the conversations I was having with advice firms.

One firm got in touch on a Friday. We met on the Monday, agreed everything by Wednesday, completed the onboarding on Thursday and had them ready to send work by Friday. They needed support quickly, but they also wanted a provider willing to fit around the way they already worked, rather than asking them to adopt someone else’s templates and processes.

Another firm wasn’t in a hurry at all. They wanted another conversation, more technical information and time to complete their own due diligence before making a decision.

One of our existing clients asked what the maximum level of support we could provide over the next six months would be as their business continues to grow.

Another firm asked whether, once we’d completed the suitability report, we could also take ownership of implementing the advice across every case we worked on.

And one conversation stood out more than any other.

The firm already had an in-house team.

They weren’t looking to replace it.

They wanted experienced technical support around a less experienced team. People they could bounce ideas off, challenge difficult cases with and help develop confidence over time.

When I looked back over the week, something became obvious.

None of those conversations were really about report writing.

They were about confidence.

Ownership.

Consistency.

Experience.

They were about knowing there was someone there when capacity suddenly changed, when a complex case landed on the desk, or when another perspective would help strengthen a recommendation.

That feels like quite a significant shift.

For years, much of the conversation around outsourced support has centred on producing suitability reports.

Can you write the report?

How quickly can you turn it around?

How much does it cost?

Those questions still matter.

But increasingly, I’m hearing different ones.

Can you support our team?

Can you help us improve consistency?

Can you take ownership of implementation?

Can you strengthen our processes?

Can you adapt to the way our business already works?

They’re very different conversations.

And I don’t think many people would argue that technology is going to take more of the repetitive work off our desks over the next few years.

Personally, I think that’s a positive thing.

If technology can reduce the time spent formatting documents, moving information between systems or producing a first draft, it gives us more time to focus on the things that genuinely improve advice.

Technical judgement.

Critical thinking.

Supporting advisers.

Developing less experienced team members.

Improving operational consistency.

Strengthening the evidence behind recommendations.

Maybe that’s where the real value has always been.

For me, the more interesting question isn’t whether technology can produce a document.

It’s whether it can help firms produce better, more consistent advice.

Can it identify missing information before a case progresses?

Can it highlight inconsistencies that might otherwise be missed?

Can it strengthen the evidence behind a recommendation?

Can it give firms greater oversight across every case, rather than just the ones selected for review?

Those feel like much more valuable questions.

And I suspect they’re the conversations we’ll be having far more often over the next few years.

Technology will continue to evolve.

So will the way we all work.

But I don’t believe the future is about replacing people.

I think it’s about giving experienced professionals more time to do the things technology can’t.

To challenge.

To question.

To coach.

To improve.

And ultimately, to help firms deliver better advice.

I’d be really interested to hear your thoughts.

Has technology changed what you expect from suitability support, or has it simply changed where you think the real value now sits?

Further Reading

If you missed the first edition of Behind Better Advice, you can read it here:

Behind Better Advice

If you’d like to learn more about how we support financial planning firms with suitability consulting, annual reviews and operational support, you’ll find more information here:

Services

Why does every advice firm seem to have a different annual review process?

One of the things I enjoy most about my role is seeing how different advice firms operate behind the scenes.

Over the years, we’ve worked with firms of all shapes and sizes. Some have dedicated paraplanning teams. Some have one adviser doing almost everything. Others sit somewhere in the middle.

Recently, I came across a discussion between advisers that asked what sounded like a simple question:

“How do you collect client information before an annual review?”

The replies were fascinating.

Some firms send digital fact finds. Others rely on client portals. Some still post paper forms. Quite a few said they’d stopped asking clients to complete anything beforehand and simply update everything during the meeting instead.

There wasn’t a right answer.

There wasn’t even a common answer.

Everyone had developed a process that worked for their business, their clients and their team.

It made me realise something.

Perhaps the challenge isn’t finding the perfect annual review process.

Perhaps it’s recognising that every advice business is trying to solve a slightly different problem.

Annual reviews aren’t the difficult part

When people talk about annual reviews, they often picture the meeting itself or the suitability report that follows.

In reality, they’re only a small part of the overall process.

Long before an adviser sits down with a client, somebody has contacted them, arranged the meeting, gathered information, updated records, requested valuations and made sure everything is ready.

After the meeting, the work continues.

Recommendations need implementing.

Providers need chasing.

Platforms need updating.

Suitability reports need preparing.

Actions need recording.

Then, while all of that is happening, the day-to-day servicing doesn’t stop.

Client emails still arrive.

Withdrawal requests still need processing.

Addresses change.

Direct debits need amending.

New clients need onboarding.

It isn’t one task that consumes time.

It’s the accumulation of hundreds of smaller ones.

Why every firm looks different

Reading through that discussion, one thing became obvious.

The technology wasn’t really the issue.

Some firms had excellent systems.

Others preferred simpler processes.

Some had embraced automation.

Others deliberately hadn’t.

The common challenge wasn’t software.

It was people.

Clients don’t always complete forms.

Sometimes they don’t understand what’s being asked.

Sometimes they forget.

Sometimes they only remember something important once they’re sitting in front of their adviser.

That’s why there probably isn’t a single “best” annual review process.

Good firms build one that works for their clients, not somebody else’s.

What we’ve learnt

One of the biggest lessons we’ve learnt from working alongside advice firms is that structure matters far more than standardisation.

No two firms operate in exactly the same way.

Some want support preparing annual reviews.

Others want help managing implementation.

Some need somebody to own provider chasing and back-office updates.

Others are looking for support with onboarding, workflow design or simply making better use of their CRM.

Trying to force every business into the same process rarely works.

The best servicing models are built around the business, not the other way round.

Behind Better Advice

Over the coming months, I’ll be sharing a series called Behind Better Advice.

Each edition will look at a real project we’ve worked on (anonymised where appropriate), the operational challenge behind it and the practical lessons we learnt along the way.

Next week we’ll be publishing the first downloadable case study.

It follows a Paradigm member firm that wanted to strengthen the structure behind its annual reviews and ongoing client servicing. Rather than creating a completely new process, we worked together to build a servicing model around the way the business already operated.

I hope it’ll be useful for firms reviewing their own servicing models, whether they’re looking to make small improvements or thinking more broadly about how work flows through the business.

In the meantime, I’d love to hear your thoughts.

If you were designing your annual review process from scratch today, what would you do differently?

Further Reading

If this has got you thinking about how your own annual review process is structured, you can find out more about how we support firms with suitability consulting, annual reviews and ongoing client servicing here:

🔗 Suitability Consulting Support

Next week, we’ll also be publishing the first Behind Better Advice case study, Building a Bespoke Client Servicing Model.

It takes a closer look at how we worked with a Paradigm member firm to design a servicing model around the way they already operated, covering everything from annual reviews and implementation through to workflow design and ongoing client servicing.

I hope you’ll find it useful.

Just some Friday musings from me Amy North

Over the last few weeks, we’ve been recruiting at We Complement.

If you’ve been following us on LinkedIn, you’ll probably have seen a few of the posts.

What you probably haven’t seen is the number of conversations we’ve had behind the scenes.

And honestly, they’ve been one of my favourite parts of the whole process.

We’re not really formal interview people.

Of course, we need to understand someone’s experience and whether they can do the role, but if you’ve had a chat with me and Paul Kenworthy over the last few weeks, you’ll know I’m far more interested in hearing your story.

How did you end up in financial services?

How did you find your way into this profession?

What do you enjoy most?

What would you change if you could?

I’ve probably spent more time talking about careers, children, hobbies and life than I have asking interview questions.

One thing kept coming up.

Hardly anybody actually planned to end up here.

Almost everyone just… found it.

That made me smile because when I thought about our own team, exactly the same thing had happened.

Lucy originally studied Film and TV Production. She imagined a completely different career before deciding she wanted the stability of a regular office job. Today, one of her favourite parts of the role is writing suitability reports because it lets her combine technical research with something she’s always loved, writing.

Claire started out in pension administration before gradually moving into a more technical role. She talks about enjoying “putting the puzzle pieces together” to build a solution for clients, which perfectly sums up the way she approaches every case.

Hannah? She’ll quite happily admit she only ended up in financial services because a recruiter found her CV. Now she gets genuine satisfaction from taking one of those files where you wonder where on earth to start and turning it into something clear, well-structured and meaningful for the client.

Different backgrounds.

Different journeys.

The same profession.

One thing I loved was that no two stories were the same.

Some started in pensions.

Some came through administration.

Some had worked in compliance.

One had studied Film and TV.

Nobody followed the same path.

Yet somehow they all ended up in the same profession.

The people we’ve spoken to over the last few weeks were no different.

One person had been freelancing exclusively for the same adviser for years.

The relationship worked brilliantly, but she’d reached a point where she wanted the security that comes with being employed. Her adviser simply didn’t want the responsibility and overheads that come with taking on staff.

It reminded me that flexibility looks different depending on where you are in life.

Then we met two brilliant people who’d done the complete opposite.

They’d taken the leap and started their own businesses.

I absolutely loved hearing about it.

It takes confidence to back yourself like that, and I genuinely think it’s brilliant that more people now see that as an option.

They weren’t looking to leave because things weren’t working. They just wanted a little part-time work while they built their client base.

Unfortunately, we couldn’t make that work, which was genuinely disappointing because they really knew their onions.

Then there were the working parents.

The conversations weren’t about salary.

They were about school runs.

Sports days.

School plays.

The inevitable phone call from school because someone’s been sick.

Being able to disappear for an hour in the afternoon without feeling guilty, then picking work back up later that evening.

As a mum of three myself, those conversations really resonated.

What struck me most about all these chats was that very few people were simply chasing a bigger salary.

Some wanted the security that comes with being employed.

Others wanted more flexibility around family life.

A few wanted the freedom to build something of their own.

And quite a few wanted to work somewhere that genuinely values good technical thinking, where they could ask questions, challenge ideas and be part of the advice process rather than simply writing reports at the end.

That last one came up more than once.

It made me realise how much our profession has changed.

When I first came across it, it was often talked about as a stepping stone to becoming an adviser.

I don’t hear that nearly as much anymore.

People are choosing technical careers in financial planning because they genuinely enjoy the work.

They like solving problems.

They enjoy researching.

They take pride in explaining complex recommendations in a way clients can actually understand.

They’re proud of what they do.

And they should be.

Something else I noticed was just how supportive this profession is.

Every single person we spoke to was happy to share their journey.

Some talked openly about mistakes they’d made.

Others shared advice they’d been given early in their careers.

Nobody felt competitive.

Everyone seemed genuinely happy to help the next person coming through.

I think that’s pretty special.

I can’t think of many careers where so many people seem to have found themselves doing something they never planned… and then couldn’t imagine doing anything else.

The last few weeks have reminded me that our profession is in a really good place.

People are backing themselves.

They’re building careers, businesses and lives that work for them.

They’re choosing workplaces that value good thinking, not just quick turnaround times.

And if that’s the direction we’re heading, I think we’re all onto something pretty special.

There is a point in some tax-efficient investment cases where the conversation can start to sound very tidy.

The client has an inheritance tax concern.

Or an income tax liability.

Or a gain they want to manage.

Or they have used other allowances and want to know what else could be considered.

And before long, Business Relief, EIS, AIM portfolios or VCTs are part of the discussion.

That does not mean they are wrong.

Far from it.

For the right client, in the right circumstances, these can be valuable planning tools.

But they are rarely simple advice cases.

And that is where the suitability conversation needs to slow down a little.

 

The relief is not the whole recommendation

Tax relief is often the reason the conversation starts.

It is usually the bit the client understands first.

It can feel tangible.

It can feel attractive.

It can feel like the “why” behind the recommendation.

But it cannot do all the heavy lifting.

Because underneath the relief, there are still some fairly big advice questions.

Can the client afford the risk?

Do they understand the liquidity position?

Is the holding period realistic?

Do they understand what smaller-company exposure really means?

Could they cope if the investment falls in value?

Have simpler planning options been considered first?

And probably one of the most useful questions:

Would this still feel suitable if the tax relief was not there?

Not because the tax relief is irrelevant.

It clearly matters.

But if the recommendation only works when the tax benefit is doing most of the talking, it probably needs more challenge.

 

Different products, similar suitability themes

Business Relief, EIS, AIM portfolios and VCTs all do different jobs.

They have different rules, different planning uses, different risks and different client outcomes.

But when you look at the suitability work behind them, a lot of the same themes keep coming up.

Risk.

Liquidity.

Client understanding.

Capacity for loss.

Time horizon.

Charges.

Investment experience.

The client’s wider plan.

And whether the recommendation is proportionate to the objective.

That last one matters.

Because it is very easy for a tax-efficient investment to look sensible in isolation.

The harder question is whether it makes sense for this client, at this point, for this objective, with this level of risk.

Here’s a simple way to look at the main suitability focus, key risks and evidence points across four common tax-efficient investment areas.

It is not a replacement for full research or advice, but it can be a useful sense-check before the recommendation becomes too focused on the relief.

The report needs to explain the trade-off

A good suitability report should not just explain how the tax relief works.

It should explain the trade-off.

What is the client hoping to achieve?

Why is this route being considered?

What alternatives have been discounted?

What are the main risks?

How has capacity for loss been evidenced?

What does the client understand about access, holding period and potential loss?

How does this investment fit alongside the rest of the client’s planning?

That is where the advice becomes more defensible.

Not because every sentence needs to sound technical.

But because the reasoning is clear.

A reviewer should be able to follow the logic without having to guess why the recommendation was made.

And the client should be able to understand what they are accepting, not just what they might save.

 

A practical sense-check for advisers

Before finalising a tax-efficient investment recommendation, it can help to step back and ask:

1. What is the real planning objective?

Is this about inheritance tax planning, income tax relief, CGT deferral, tax-efficient income, portfolio planning, or something else?

And is that objective clearly evidenced in the file?

2. Is the recommendation proportionate?

Does the level of risk, complexity and illiquidity make sense compared with the client’s need?

Or is the tax benefit pulling the case further than it should?

3. What risks need to be explained clearly?

Not just listed.

Explained.

Capital risk.

Liquidity risk.

Qualifying risk.

Smaller-company exposure.

Exit risk.

Holding period.

Income uncertainty.

The client needs to understand the trade-off in plain English.

4. What would make this case hard to defend later?

This is a useful one.

If the file was reviewed in two years, what would someone question?

The client’s capacity for loss?

Their investment experience?

The size of the recommendation?

The reason simpler options were discounted?

The explanation of liquidity?

Those are often the areas worth tightening before the report is finalised.

 

Where the real work sits

A lot of the work behind good advice happens before the client ever sees the final report.

The research.

The challenge.

The provider and product checks.

The awkward questions.

The gaps that need filling.

The “hang on, does this actually fit?” bit.

It is not always the most visible part of the advice process.

But it is often the part that makes the recommendation stronger.

And with Business Relief, EIS, AIM portfolios and VCTs, that work really matters.

Because these recommendations need more than a tax explanation.

They need evidence that the client understands the risks, accepts the trade-off and is suitable for the route being recommended.

We have pulled together a practical guide

At We Complement, we have created a guide called:

Tax Relief Isn’t the Whole Story

It covers Business Relief, EIS, AIM portfolios and VCTs from a suitability angle.

It is not designed to be a technical tax manual or a product guide.

It is more of a practical support piece for advisers, paraplanners and suitability teams who want to sense-check the questions behind these recommendations.

Inside, we look at:

• the main suitability considerations across BR, EIS, AIM portfolios and VCTs
• the risks that need to be explained clearly
• the evidence that should sit behind the recommendation
• client understanding and capacity for loss
• how to stop the tax relief becoming the whole story
• practical questions to ask before the report is finalised

Because tax relief can open the conversation.

But suitability has to carry it.

If you would like a copy of the guide, give us a shout and we will send it over.

Useful external links

For advisers who want to check the underlying rules and guidance, these are useful places to start:

Business Relief for Inheritance Tax

 

Enterprise Investment Scheme (EIS) and Venture Capital Trusts (VCT) changes

 

COBS 9 Suitability (including basic advice) (other than MiFID and insurance-based investment products)

 

Consumer Duty

 

These links do not replace provider due diligence, tax advice or firm-specific compliance guidance, but they are useful reference points when sense-checking the advice file.

VCT conversations can sometimes feel more straightforward than they really are.

The client has income tax to reduce.

The allowance is clear.

The tax year-end is approaching.

There is a familiar rhythm to it.

A bit like using ISA allowances, pension contributions or other annual planning opportunities, VCTs can start to feel like another “use it or lose it” tax-year discussion.

But that is where advisers need to be careful.

Because VCTs are not routine tax planning.

They are high-risk investments into smaller, often early-stage companies, with tax relief attached.

And that distinction matters.

 

Why VCTs get attention

Venture Capital Trusts can look attractive for the right client.

There may be 20% income tax relief on new VCT shares, provided the client has enough income tax liability and holds the shares for at least five years.

Dividends are usually tax-free.

Any growth is generally free from capital gains tax.

For clients with high income, reduced pension allowances, large tax bills or a need for tax-efficient income, that can sound appealing.

And in some cases, VCTs can genuinely form part of a wider planning strategy.

But the reliefs should not become the reason the conversation moves too quickly.

Because the question is not simply:

“Can the client benefit from the tax relief?”

It is:

“Is this the right type of investment risk for this client, given their wider position?”

Those are very different questions.

 

The tax year-end pressure

One of the practical issues with VCTs is timing.

They often come up around tax year-end, when clients are thinking about income tax, allowances and what can still be done before 5 April.

That deadline can create a sense of urgency.

And urgency is not always helpful in suitability conversations.

It can make the discussion feel more about taking action before a cut-off point than taking time to understand the trade-off.

For advisers, that means the pace of the conversation matters.

A useful sense-check is:

Would this recommendation still feel right if there was no tax year-end deadline attached to it?

If the answer is yes, the planning may be on stronger ground.

If the answer is less clear, it is probably worth slowing down.

Deadlines can explain timing.

They should not create suitability.

 

The risk is not just “higher risk”

VCTs are often described as higher risk, and of course that is true.

But for advice purposes, “higher risk” is not really enough.

The client needs to understand what kind of risk they are taking.

VCTs invest in smaller companies, which may be unquoted or listed on AIM. Some may be early-stage, less established, more vulnerable to failure, or harder to value.

The value of the shares can fall.

Income is not guaranteed.

The shares may be difficult to sell.

The secondary market can be limited.

The investment may behave very differently from the client’s mainstream portfolio.

That needs to be brought to life.

Especially if the client has only previously invested through pensions, ISAs, model portfolios or multi-asset funds.

A client can be comfortable with normal investment risk and still not be comfortable with VCT risk.

That is a really important distinction.

 

The five-year holding period is not the whole access conversation

The five-year holding period for income tax relief is often one of the first things clients remember.

Hold for five years, keep the relief.

But again, that is only part of the story.

The client may technically meet the holding period and still find that selling is not straightforward, quick or available at the price they expected.

So the access conversation needs to go further than:

“You need to hold it for five years.”

It should probably sound more like:

“You need to be prepared to hold this for at least five years, possibly longer, and accept that selling may not be quick or at a stable value.”

That is a different client expectation.

And it matters.

For advisers, a useful question is:

If the client needed this money unexpectedly, would the wider plan still work without relying on the VCT being sold?

If the answer is no, the suitability case may need more thought.

 

The income point needs careful handling too

Tax-free dividends can be attractive, particularly for clients looking for tax-efficient income.

But VCT dividends are not the same as secure income.

They depend on the underlying investments, the VCT’s performance and the manager’s dividend policy.

That does not mean they are unsuitable.

But it does mean they should not be presented, or understood, as dependable income in the same way as other sources.

For clients who need reliable income to meet living costs, this point matters.

A useful way to test it is:

Is the client treating the dividends as a bonus, or relying on them as part of essential income?

If they are relying on them, the adviser may need to explore whether that is realistic.

 

What advisers may want to evidence

A strong VCT case is not just a list of tax benefits.

It should show why the recommendation fits the client’s wider circumstances.

That might include evidencing:

Why VCTs are being considered now.

What tax issue is being addressed.

Whether the client has used pensions, ISAs and other planning routes first.

Whether the client has enough income tax liability to use the relief.

How much of the wider portfolio is being allocated.

Whether the client can afford to lose the capital invested.

Whether they understand the five-year minimum holding period.

Whether they understand that access may still be limited after five years.

Whether they understand dividends are not guaranteed.

Whether their investment experience genuinely supports this type of risk.

Whether the recommendation remains proportionate.

That final point is important.

A VCT may be suitable for part of a client’s planning.

That does not mean it should become too large a part.

The relief might be 30%, but the client is still putting 100% of the capital at risk.

That is often the line worth sitting with.

 

The practical takeaway

VCTs can be useful.

They can help the right client with tax planning, diversification and access to smaller-company investment opportunities.

But they should not be treated like a routine annual allowance exercise.

They are not an ISA top-up.

They are not a pension contribution.

They are not simply a way to reduce a tax bill.

They are high-risk investments with valuable tax reliefs attached.

And that order matters.

For advisers, the strongest suitability conversations are the ones where the client understands the full exchange.

The potential relief.

The investment risk.

The access limitations.

The uncertain income.

The holding period.

And the possibility that the investment may not behave the way they expect.

A helpful question to come back to is:

Is the client choosing this because it suits their wider plan, or because the tax relief is making it feel like an obvious next step?

That is often where the real advice work sits.

Across this series, Claire has looked at Business Relief, EIS, AIM portfolios and now VCTs.

Different products.

Different planning uses.

Different risks.

But one theme runs through all of them.

Tax relief can open the conversation.

Suitability has to carry it.

AIM portfolios can sometimes feel easier to explain than other tax-efficient investments.

They are shares.

There is a market.

There is a portfolio.

The client may already understand the idea of investing in companies, especially if they have pensions, ISAs, model portfolios or direct equity experience.

So compared with something like EIS, AIM can feel a little more familiar.

But that is exactly where advisers need to be careful.

Because familiar does not always mean simple.

And it definitely does not mean low risk.

 

Why AIM portfolios come up in advice conversations

AIM portfolios are often considered where a client has an inheritance tax planning objective but does not want to give money away.

That might be because they want to retain ownership.

They may be worried about future care costs.

They may not feel comfortable with outright gifts or trusts.

They may want something that feels more flexible than traditional estate planning.

For the right client, an AIM portfolio can have a place. Certain AIM shares may qualify for Business Relief, which can mean they fall outside the estate for inheritance tax purposes after two years, provided they are still held at death and continue to qualify.

That two-year point often gets attention.

It can sound much more appealing than the seven-year gifting rule.

But for advisers, the important bit is making sure the client understands what sits behind that headline.

Because this is still an investment-led strategy.

And the suitability work is not just about whether the client wants to reduce inheritance tax.

It is about whether they can accept the investment risk, liquidity risk and qualifying-status risk that come with this route.

 

The familiarity risk

One of the practical challenges with AIM is that clients may hear “shares” and assume they understand the risk.

They might mentally compare it with investments they already hold.

A pension portfolio.

An ISA.

A managed equity fund.

A mainstream UK equity allocation.

But AIM exposure can behave very differently.

The companies may be smaller. The market can be more volatile. Trading volumes can be lower. Share prices may move sharply. Selling may not always be straightforward, especially in stressed market conditions.

That does not make AIM unsuitable.

But it does mean the conversation needs to be specific.

Not just:

“The client understands investment risk.”

More like:

“The client understands the additional risks associated with smaller companies, AIM-listed shares, possible liquidity constraints and the fact that Business Relief is not guaranteed.”

That distinction matters.

A client who is comfortable with a mainstream balanced portfolio may not automatically be comfortable with a concentrated smaller-company portfolio used for IHT planning.

So a useful adviser question is:

 

Has the client understood how this could feel in practice, not just how it works on paper?

For example, would they still feel comfortable if the portfolio fell sharply? Would they still want to hold it if markets were unsettled? Would they be able to avoid making a rushed decision if the value moved against them?

Those questions can make the risk feel more real.

 

The two-year point needs careful framing

The two-year holding period is often the part clients remember.

But time alone is not the whole story.

For Business Relief to apply, the shares must remain qualifying and usually need to be held at death. If the underlying shares cease to qualify, or the rules change, the expected inheritance tax treatment may not apply in the way the client originally hoped.

That can be easily missed if the conversation becomes too focused on “two years”.

A practical way to frame it with clients is:

 

“The two-year point is not a finish line. It is one condition in a planning strategy that needs to continue working.”

That wording helps keep the conversation balanced.

It also makes clear that AIM is not a guaranteed tax shelter. It is an investment portfolio with potential IHT benefits attached.

For the advice file, it is worth evidencing that the client understands:

The shares need to remain qualifying.

The tax treatment can change.

The value of the portfolio can fall.

Access may not be immediate.

The investment may need to be held until death for the intended IHT outcome.

That last point is especially important.

Because if the client thinks of AIM as a short-term two-year solution, there may be a mismatch between what they believe they are doing and what the planning actually requires.

 

The rule change advisers need to factor in

There is also a newer planning point that needs to be part of the conversation.

From 6 April 2026, qualifying AIM shares are expected to receive 50% Business Relief for inheritance tax purposes, rather than the 100% relief that has historically applied. That means the IHT position may still be beneficial, but it is not the same planning outcome clients may have heard about before.

For advisers, this makes the suitability discussion even more important.

If the relief is lower, the investment case, risk profile, liquidity position and client understanding need to stand up even more clearly. The question is no longer just whether AIM could reduce an IHT liability, but whether the remaining tax benefit is enough to justify the additional risk for this client.

That is especially important for existing clients who already hold AIM portfolios. Their original recommendation may have been made under a different relief expectation, so review conversations may need to revisit whether the planning still feels proportionate.

 

The access conversation needs more than “you retain control”

AIM portfolios are often attractive because they allow the client to retain ownership and potential access.

That can be a real advantage compared with gifting.

But “retaining access” needs careful explanation.

There is a difference between:

“You still own the investment.”

and

“You can access the money quickly, at a stable value, whenever you need it.”

Those are not the same thing.

For advisers, this is where the conversation needs to connect back to the client’s real life.

Could they need the money for care?

Would they use it to support family?

Is this part of their emergency reserve?

Would selling during a market fall create a problem?

Could they meet income and capital needs without relying on this portfolio?

A useful sense-check is:

 

If the client needed this money sooner than expected, and the AIM portfolio was down at the time, would the wider plan still work?

If the answer is no, or not comfortably, the recommendation may need more thought.

That does not automatically rule AIM out.

But it does mean the advice needs to show how the access risk has been explored, rather than simply saying the client retains control.

 

What advisers may want to evidence

For advisers and paraplanners, a strong AIM case usually shows why this route fits the client’s wider circumstances, not just their IHT objective.

That might include evidencing:

Why the client is considering AIM now.

Why gifting, trusts, life cover or spending strategies were not preferred.

How much of the estate or portfolio is being allocated.

Whether the client can tolerate capital loss.

Whether the client can cope with delayed or uncertain access.

What investment experience the client already has.

How smaller-company risk has been explained.

Whether the client understands qualifying-status risk.

Whether the client understands this may need to be held until death for the intended IHT outcome.

Whether the recommendation remains proportionate.

That final point is worth pausing on.

AIM may be suitable for part of the client’s estate planning.

That does not mean it is suitable for too much of it.

Proportion matters.

Especially where the client is older, nervous about markets, reliant on the capital, or already carrying other investment risks elsewhere.

 

The practical takeaway

AIM portfolios can be useful.

But they should not be made to sound simpler than they are.

The key adviser challenge is making sure the client does not confuse familiarity with suitability.

Yes, AIM involves shares.

Yes, there may be a market.

Yes, there may be potential IHT benefits after two years.

But the client still needs to understand the investment risk, the liquidity risk, the qualifying-status risk and the fact that the tax outcome is not guaranteed.

A helpful question to come back to is:

 

Is the client choosing this because they understand the whole trade-off, or because the two-year IHT point sounds attractive?

That is often where the real advice work sits.

Last week, we looked at EIS and the risk of letting the reliefs become louder than the risks.

This week, AIM portfolios bring a slightly different challenge.

The risk is not always that the client does not understand investments at all.

Sometimes it is that the investment sounds more familiar than it really is.

We’ll be sharing the full guide at the end of the series, covering Business Relief, AIM portfolios, VCTs and EIS.

For now, the point is simple.

Tax relief matters.

But suitability is what makes the recommendation stand up.

For anyone who wants to look at the background in more detail, HMRC has guidance on how Business Relief works for inheritance tax, including what may qualify and how relief is claimed.

Business Relief for Inheritance Tax

The London Stock Exchange also has a useful overview of AIM as a growth market.

AIM – Funding innovation for over 30 years

And for a wider reminder on risk communication, the FCA’s review of financial promotions for high-risk investments is worth keeping in mind, especially when thinking about how clearly clients understand the risks as well as the potential benefits.

Financial Promotions for high-risk investments

There is a point in some EIS conversations where things can start to move quite quickly.

The client hears 30% income tax relief.

Then capital gains tax deferral.

Then tax-free growth after three years.

Then loss relief.

Then possible inheritance tax relief after two years.

And before long, the conversation can start to feel less like an investment recommendation and more like a list of attractive tax features.

You can understand why EIS gets attention.

It offers some of the most generous tax reliefs available to UK investors. For the right client, in the right circumstances, it can have a place within a wider planning strategy.

But it is also one of those areas where advisers often have to work hardest to keep the conversation balanced.

Because with EIS, the tax relief is only part of the story.

The practical challenge is making sure the client understands what they are accepting to access those reliefs.

 

Why the client may focus on the reliefs first

Enterprise Investment Schemes are designed to encourage investment into smaller, early-stage companies.

Clients can invest directly into qualifying companies, or through a specialist manager who invests across a spread of qualifying businesses.

The tax position can be appealing.

There may be 30% income tax relief, as long as the client has enough income tax liability.

There may be an option to carry back the investment and treat it as if it was made in the previous tax year.

There may be capital gains tax deferral.

There may be tax-free growth if the shares are held for at least three years and the companies remain qualifying.

There may be loss relief if the investment falls in value.

And in some cases, shares may qualify for Business Relief if held for at least two years at death.

That is a lot for a client to take in.

And that is where the advice conversation can become tricky.

A client may understand each tax point when it is explained on its own. But that does not always mean they have understood the overall trade-off.

So one useful adviser question is:

 

Can the client explain back, in their own words, what they are investing in and what could go wrong?

Not just what reliefs they may receive.

What could go wrong.

That is often where the quality of understanding becomes clearer.

 

The risk needs as much airtime as the relief

EIS investments are not just tax-efficient.

They are high risk.

They usually involve early-stage or smaller companies. The businesses may be unlisted. The investment may be difficult to sell. Returns are uncertain. Capital is very much at risk.

There is also qualifying status risk. If a company stops meeting the EIS requirements, reliefs already granted may have to be repaid to HMRC.

That point is worth slowing down on.

Because this is not just:

“The investment could fall in value.”

It is also:

“The tax position depends on certain conditions continuing to be met.”

That is a different kind of risk, and it needs to be explained clearly.

For advisers, this is where generic risk wording is unlikely to be enough.

It is worth being specific about the type of risk the client is taking:

Early-stage company risk.

Illiquidity.

Uncertain exit.

Potential loss of tax relief.

A longer-term commitment.

A return profile that may look very different from a mainstream investment.

If the client has only ever held pensions, ISAs, model portfolios or mainstream funds, that difference needs to be brought to life.

A useful test is:

 

Have we explained the risk in a way that relates to this client’s actual experience, not just their attitude to risk score?

Because being comfortable with investment risk in a balanced portfolio is not the same as being comfortable with early-stage company risk.

The exit question needs to be asked early

One of the most useful questions in an EIS case is:

 

How does the client think they are going to get out?

It sounds simple, but it can open up a lot.

EIS is not usually something a client can sell quickly if they change their mind. Even where there is a planned exit strategy, it is not guaranteed. The timing, valuation and route to exit all depend on what happens with the underlying companies.

This is where the manager’s role becomes important.

What is the investment focus?

How are companies selected?

How diversified is the portfolio?

What does the manager expect the exit route to be?

What happens if exits take longer than expected?

The client does not need to become an EIS expert.

But they do need to understand enough to make an informed decision.

Especially where the recommendation is being discussed around a tax-year deadline, a CGT event, or a desire to reduce income tax.

Tax planning deadlines can create pressure.

The suitability conversation needs to slow that pressure down.

A practical sense-check here is:

 

Are we recommending this because the client has a suitable need, or because there is a tax deadline approaching?

Deadlines may explain urgency.

They should not create suitability.

 

What advisers may want to evidence

For advisers and paraplanners, EIS cases often need more than a technical explanation of the reliefs.

They need a clear trail showing why EIS is suitable for this particular client.

That might mean evidencing:

Why the client is considering EIS now.

What tax issue is being addressed.

Why alternative planning routes were not preferred.

How much of the client’s overall wealth is being allocated.

Whether they can afford to lose the capital invested.

Whether they can cope with a delayed or uncertain exit.

What investment experience they already have.

How the manager’s approach has been explained.

Whether the client understands the risk of losing qualifying status.

This does not need to make the advice file longer for the sake of it.

But it does need to make the reasoning clear.

Especially if the client has been drawn to the investment because the tax reliefs look attractive.

A helpful question to come back to is:

 

If the tax reliefs were less generous, would this still look like a sensible recommendation for this client?

The answer does not have to be yes in every case. Tax planning is a valid objective.

But if the whole recommendation relies on the reliefs doing the heavy lifting, it is worth pausing and testing the advice again.

 

The practical takeaway

EIS can be a valuable planning tool.

But it needs a clear suitability trail.

Not just:

“The client wants tax efficiency.”

Not just:

“The client is high risk.”

Not just:

“The client understands capital is at risk.”

The stronger cases are usually the ones where the adviser can show why this client, with this objective, this tax position, this experience, this capacity for loss and this wider portfolio, can justify taking on this type of investment.

That is the real work.

Not making EIS sound less risky than it is.

Not letting the tax reliefs carry the recommendation.

But helping the client understand the trade-off clearly enough to make a properly informed decision.

Last week, we looked at Business Relief and the access question.

This week, EIS reminds us of something slightly different.

Sometimes the hardest part of suitability is not explaining what the tax relief does.

It is making sure the relief does not become louder than the risk.

We’ll be sharing the full guide at the end of the series.

For now, the point is simple.

Tax relief matters.

But it should never be doing all the talking.

Business Relief often comes into the conversation when clients want two things that do not always sit easily together.

They want to reduce a potential inheritance tax liability.

But they also want to keep access to their money.

That is what makes BR interesting.

For the right client, it can offer a route into inheritance tax planning without making an outright gift, setting up more complex arrangements, or relying on the seven-year gifting rule.

The headline is usually easy enough to explain. Qualifying investments may benefit from inheritance tax relief after two years, provided they are still held at death.

That is the bit clients tend to remember.

Two years.

Potential IHT relief.

Capital still in their name.

But in practice, the suitability conversation is rarely that simple.

Because Business Relief is not just an inheritance tax planning tool. It is an investment. And that means risk, access, liquidity and understanding all need to be properly worked through.

 

What makes BR attractive?

BR can be useful where a client has a genuine IHT planning need, but gifting does not quite fit.

That might be because they are not comfortable giving money away.

They may want to retain control.

They may be concerned about future care needs.

They may want the option of accessing capital later.

Or they may simply feel that a seven-year planning horizon is too uncertain.

In those situations, BR can look like a helpful middle ground.

It can give the client a way to plan for IHT while keeping the investment in their own name. Some solutions may also allow access, although this can depend on the provider, the underlying assets and market conditions.

That flexibility is often where the appeal lies.

But it is also where the advice needs care.

 

The access point is not as simple as it sounds

One of the most important questions with BR is not just:

“Does the client want access?”

It is:

“What kind of access do they think they have?”

There is a big difference between money being technically accessible and money being quickly, easily or reliably accessible.

That is where misunderstandings can creep in.

A client might hear “you can still access your capital” and take comfort from that. But if the underlying investments are in smaller or unquoted businesses, selling may not be instant. Liquidity may be limited. The value may move. Access could take longer than expected.

That does not make BR unsuitable.

But it does mean the access conversation needs to be very clear.

In day-to-day advice work, this is the bit I think needs more attention.

Not just whether the client says they are happy with the risk, but whether they understand what that risk might feel like later.

Especially if circumstances change.

A client who does not expect to need the money today may feel very differently if care costs arise, family circumstances shift, or they simply become less comfortable with investment risk as they get older.

 

When the tax benefit starts leading the conversation

There is another point worth pausing on.

Business Relief can be attractive because the tax benefit is clear and easy to quantify. That can make it tempting for the tax outcome to become the main focus of the recommendation.

But tax efficiency on its own is not suitability.

The file still needs to show why this solution fits the client’s wider position.

That includes their objectives, their attitude to risk, their capacity for loss, their need for access, their understanding of the investment and the alternatives considered.

A useful sense-check is:

If the IHT relief was removed from the conversation, would there still be a coherent reason for this client to hold this type of investment?

The answer does not always need to be yes. IHT planning can be a valid objective in its own right.

But if the whole recommendation only makes sense because of the relief, the advice probably needs more careful framing.

At the very least, the client needs to understand exactly what they are accepting in exchange for that potential tax benefit.

 

What advisers and paraplanners need to evidence

For advisers and paraplanners, BR cases are often less about explaining the rules and more about evidencing the trade-off.

That means being able to show:

The client has a clear IHT planning objective.

Gifting, trusts or other planning options have been considered.

The need for access has been explored properly.

The client understands that access may not be immediate.

The investment risk is suitable for their circumstances.

The client understands capital is at risk.

The recommendation is not being driven by tax relief alone.

None of this needs to be overcomplicated.

But it does need to be clear.

Because if a case is ever reviewed later, the question will not just be whether BR was technically available.

It will be whether the recommendation was suitable for that client at that time, based on what they needed, what they understood and what they could afford to risk.

 

The practical takeaway

The strongest BR conversations are often the ones where the benefits and limitations are given equal weight.

Not in a way that scares the client off.

Just in a way that keeps the advice balanced.

BR can be a valuable planning option. But it should not be presented as a neat fix for inheritance tax.

It is better understood as a trade-off.

Potential IHT relief.

Retained control.

Some access.

But with investment risk, possible liquidity constraints and a need for proper client understanding.

That is where the real advice work sits.

Not in knowing that the two-year rule exists, but in making sure the client understands what sits behind it.

Over the next few weeks, I’ll be looking at BR, AIM portfolios, VCTs and EIS as part of our Tax Relief Isn’t the Whole Story series.

We’ll be sharing the full guide at the end, but for now the main point is this:

Tax relief matters.

But suitability is where the real work starts.