The middle classes should copy wealthier families and work together to preserve and boost their assets, according to Justin Urquhart Stewart, a director of Seven Investment Management.
As he pointed out, generations within the same family typically run their finances separately, although their interests are often aligned – such as in securing a decent retirement for older relatives, maximising inheritances or paying school fees for grandchildren.
By discussing these issues together, families can work out a coherent financial strategy that is tax-efficient – particularly in relation to inheritance tax. This can be facilitated by the use of trusts, and by making sure all family members utilise their various tax allowances. By pooling resources they can also secure investment products and advice at a lower cost.
Chris Mole of the wealth managers Towry said: “When everyone invests individually they tend not to get good value. Typically people end up buying inferior products from banks which have high charges. This is not an efficient way to invest. Those of modest means should do all they can to reduce unnecessary waste, and not pay high fees many times over.”
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