Even if you are a seasoned investor, it is important to identify instances where you might benefit from taking advice from a professional. This is particularly important in view of a new trend for older people to pass on their wealth to help their family now, rather than leaving it in their will (identified by research from Standard Life).
Standard Life has identified three distinct types of families: "talkers" and "gifters" who are likely to discuss family money issues, and "avoiders" who are failing to release the power of family finances.
Only 25 per cent of the population involve all of the generations when planning family finances - they are likely to be open with each other, discussing salaries, upcoming bills and even inheritance. Others gift money to help with both big and small purchases.
However, some families avoid money chat, particularly the more difficult conversations. If you feel that you can't have these tricky conversations with your family, then this is where a good independent financial adviser such as a certified or chartered financial planner should be able to help identify future goals and commitments. But there are also many circumstances in which talking to a financial planner could help the "talkers", too.
As a nation, we prefer to turn to our partners or parents for their guidance on financial matters, according to research by Nutmeg. Only one in 10 are turning to finance professionals to help with financial decisions.
However, a conversation with a financial planner can be good insurance against potential bad decisions being made in a family which set out with good intentions.
For example, an Investors Chronicle reader recently contacted me to share his family's distressing experience: "My step-daughter has Downs Syndrome and when she was eight my father set up and funded over the years an equity portfolio in her name so that she could build up some savings given that she has very little prospect (if any) of making her own way financially in life. She is now 19 so no longer in full-time education and her portfolio is worth £74,000.
"She would ordinarily now be eligible for financial assistance for the cost of carers, educational activities and leisure activities. However, the Financial Assistance & Benefits Team have since advised that until her net worth is less than £23,250, they are not prepared to provide any financial assistance at all.
"As you can imagine, my father is pretty disappointed that all the funds he has provided for her equity portfolio over the years (funds which he himself has paid income tax on) are now being rapidly ploughed through by carers' fees of £400 a week.
"If there are other people in my position, who want to put aside money for a child with special needs, I would highly recommend that they set up a trust, where the child is not the only beneficiary - as if they are the only beneficiary then the trust will be considered part of their assets. While a trust is clearly not as tax-efficient as individual savings accounts or even a straight-forward equity account, the fact that the assets are not solely in the child's name will ensure that government departments cannot get their hands on it at the first opportunity, meaning the child will have something outside of the state's clutches that he or she can fall back on at some point in later life."
How families help to set children and grandchildren up financially for their future
| Form of financial help | Parents helping their children | Grandparents helping their children | Grandparents helping their grandchildren |
| Made contributions to their savings accounts | 44% | 26% | 33% |
| Made contributions to a Junior Isa | 15% | 3% | 9% |
| Made contributions to a pension for them | 2% | 2% | 1% |
| Passed on some of my wealth to them, rather than just leave it in my will | 10% | 25% | 9% |
| Written my will to ensure they benefit when I die | 39% | 59% | 26% |
| None of the above | 29% | 22% | 42% |
Source: Standard Life from The Financial Family Tree report
