By Dale Critchley, Workplace Policy Manager, Aviva
Advice on IHT planning can be remarkably effective, especially for those with larger estates, but there are reports that people are increasingly turning to GenAI for financial advice and guidance.
I asked one of the well-known AI tools a few financial questions to see what came back. I found that if you ask whether you should buy a particular stock, you will get a warning that buying shares is a regulated activity and if GenAI gave a personalised investment recommendation that might expose you to financial harm. GenAI is clearly well trained on what constitutes regulated advice.
I found that GenAI also knows what constitutes guidance, which puts it in a more informed position than most people, who have little knowledge of the advice/guidance boundary. Ask GenAI what you can do to avoid IHT on a £400,000 pension pot post-2027 and it will respond with several suggestions, not all of which are fully explained.
As an example, GenAI suggests that pension benefits held in a discretionary trust with a non-legally binding nomination are less likely to fall within IHT. This presumes that the trustees will make a judgement on whether to follow a nomination, or not, based on tax efficiency. While this is possible, it’s questionable whether it’s probable, and there is no initial explanation as to how it might work. As most pension nominations are non-binding the potential for a scheme member to assume they needn’t worry about IHT is a real risk.
The other solution missing from the list provided in my test, is to seek regulated advice. GenAI points out that the list of potential actions “does not constitute personal financial advice, they’re general planning options supported by published guidance”, but fails to recommend seeking regulated advice as an action in itself.
Most of what was on my GenAI to- do list made sense, it was a helpful starting point in understanding the issues and some of the simpler solutions but, as is often the way with Gen AI, a seemingly complete list of well-worded bullet points can give the impression that AI has all the (correct) answers.
While we can tell people that GenAI should be a co-pilot, not an autopilot it’s clear that GenAI will be used as a source of guidance in the absence of more reliable sources of information. It’s something for everyone involved in running a scheme to consider.
The IHT change is an example of a development that will concern far more people than it will impact. The biggest issue for most people is having saved enough to last them through their retirement, and most people will live to enjoy the full benefit of their pension saving. This will not prevent people from worrying about the consequences for their children if the worst were to happen, however. Many will want to ensure their children get the maximum benefit from an inheritance.
Schemes should consider communication well in advance of next April, to allow people time to plan or put protections in place. We are likely to see increased attention on this as we get closer to April 2027 and people may appreciate some human reassurance, guidance and advice before then.
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