Upcoming changes that will see unused pension pots come into scope of inheritance tax (IHT) are altering how financial advisers spend their time and what they discuss with clients, research from Flagstone has found.

It revealed that 64 per cent of advisers were spending more time improving their own understanding of the evolving IHT framework, while 31 per cent were dedicating more time to compliance and documentation related to the incoming changes.

Around one in seven (15 per cent) said they were spending more time exploring platforms and technology they will need to meet changing client requirements, and 43 per cent felt disappointed they did not have all the answers on the subject for their clients.

From April 2027, unused pension pots will be in scope of IHT, with the government having published related draft legislation in July 2025.

Flagstone found the evolution in how advisers were working came amid a changing focus of their client interactions, with 79 per cent of advisers spending more time discussing the implications of IHT on pensions with their clients.

Furthermore, nearly three quarters (73 per cent) were spending more time talking to clients about estate planning more generally.

The research also identified a shift in which strategies advisers were discussing most frequently with their clients.

Regular gifting (84 per cent), irregular but substantial gifts (25 per cent), and spending pension money (76 per cent) were some of the strategies advisers were discussing the most with clients, driven by clients’ primary concern of leaving tax bills their beneficiaries will have to deal with.

“The plan to lift IHT exemption on pensions is causing vast changes to advisers’ working lives," commented Flagstone head of strategic relationships and new business, Claire Jones.

“They are grappling with what this all means for how best their clients can not only plan their estates but manage their day-to-day retirement spending.

“It’s forcing some delicate conversations between clients and their families, and it must be frustrating for advisers to know that they haven’t yet got all the facts to hand to make the best possible strategic recommendations.

"Rumours of changes to pensions tax relief only add to the complexity of the situation facing advisers right now.

“Speculation and extended deliberation are no good for anyone. The government needs to clarify its long-term intentions for pensions this autumn, after which advisers can increase their own understanding and maximise the time left before changes take effect to get their clients’ affairs in order.”

Jones noted that actively gifting substantial sums prior to death demanded a complicated overhaul of every client’s estate planning strategy.

“In addition to the data, what we’re hearing about anecdotally is a growing trend towards ‘whole-of-life’ insurance policies that protect pensions in life and after death,” she continued.

“Whatever happens, it’s highly likely that more people of pensionable age will be drawing down higher volumes of cash than previously. Ensuring these clients are well-appraised of the cash management strategies available to them will be more important than ever too.”

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