1. BREAKOUT SESSION 1 – A - AVIVA

2. Helping Britain face up to retirement
For adviser use only. This information has not been approved for use with customers.

3. Learning objectives At the end of this session you will have seen:
Review of the Financial Advice Market review and the advice gap
Ideas and strategies for intergenerational planning
Opportunities to engage with millennials
A comparison of ways of saving for families – junior ISA, trusts and investment bonds
Support for paraplanners
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4. Financial Advice Market Review (FAMR) and the advice gap

5. Financial Advice Market Review (FAMR)
Launched in August 2015 to examine how financial advice could work better for consumers
Final review marked 28 recommendations, 21 suggested further consultations
The recommendations outlined in the report are aimed at:
providing affordable advice to consumers
increasing the access to advice
addressing industry concerns relating to future liabilities and redress, without watering down levels of consumer protection.
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6. Four Advice gaps Source: The Four Advice Gaps. Citizens Advice Gap
The affordable advice gap affects consumers who are willing to pay for advice but
not at current prices. Our research suggests that up to 5.4 million extra people
would consider paying for advice if it cost less.
● The free advice gap affects people who want advice but are unable to pay for it.
Up to 14.5 million people who think they would benefit from free advice haven’t
taken any in the past two years. The free advice gap includes:
○ 5.3 million people who have needed free advice in the past two years but
haven’t taken it.
○ 735,000 people who have tried to access free advice in the past two years
but couldn’t due to lack of supply.
● The awareness and referral gap affects people who are not aware that advice
exists, or where to get that advice. As many as 10 million people who think they
would benefit from free advice are not aware of public financial guidance. The
awareness and referral gap includes:
○ 3.3 million people say they need free money advice but failed to get it
because they didn’t know it existed or where to get it
○ 3.4 million people have raised a financial issue with a trusted professional at
some point but were not given help or were not told where to find it.
● The preventative advice gap affects those who would benefit from having money
advice as a preventative measure. We found that as many as 23 million people
have fallen into a preventative advice gap at least once in their life.
○ For instance, 39 per cent of people who have expected a baby would have
taken money advice if it was offered.
○ 1.2 million people who have e taken paid for or free advice in the last two
years have not had the non-financial causes of those problems addressed.
Source: The Four Advice Gaps. Citizens Advice Gap
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7. Affordable advice gap
Only 6% of people paid for advice in the past two years
This segment are willing to pay for advice but not at current prices
RDR arguably forced some advisers out of the market and pushed the prices up
Demand means advisers are focusing on wealthier clients
20% of people are willing to pay for advice when making an investment but only 6% would pay £500 or more meaning the expected cost to pay is around £ £500
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8. Intergenerational planning and opportunities with millennials

9. UK Generation split
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10. Intergenerational planning
The transfer of wealth from family members is both a threat and an opportunity to your business
It can support the growth of your business and can help to become the trusted family adviser
In the US 66% of adult children dismissed their parents’ adviser after they inherited wealth 1
This issue can become more apparent with firms that are not equipped to connect with their clients with the use of technology
Engaging the whole family can show your clients you care about the future success of their children
Source: 1. InvestmentNews Data
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11. Will my current model work?
Spend time understanding the family and what’s important to them
Being aware changing dynamic of families such as divorce, income, death
Consider and investigate any hidden information that is important to wealth succession
Encourage clients to include adult children in meetings
Segment your approach and use technology as a cost effective way to communicate with segments of your clients
Develop marketing plan to include a digital communication stratgy
Diversify you workforce and hire younger people into your business to relate and engage with different clients
Speak to baby boomers about long term care or power of attorney for elderly relatives
Discuss options of retirement income and pension freedoms
Talk through property as an asset for customers considering equity release
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12. Who are millennials? Born between 1980 – 1994
Around 13.8m millennials living in the UK
More than a quarter of millennials live at home with their parents, including 10% of men aged
Many have graduated into a severe economic recession
Grown up with extraordinary technological change
Spent their formative years living under the pall of terrorism
Currently aged between 20-35
Also called Millennials
millennials follow on from generation X
Often called lazy, self involved, can’t live without a smartphone but also a generation that is marked by creativity and social responsibility.
This group of people saw their defining geopolitical moment was 9/11 and the “war on terror” that followed. Terrorism is to them what the threat of nuclear war was to boomers and older members of Gen X.
They have grown up with images of mass murder – in universities, nightclubs, army barracks, trains, buses, museums, cafes, beaches and city streets – and therefore have everywhere to fear. In some senses, this is Generation Terror.
Source:
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13. Why millennials matter
Millennials’ use of technology sets them apart – have grown up with smart phones, laptops, social media
They are ambitious and value the opportunity to progress quickly
Optimistic – those asked if they expected to be better off than their parents, 67% all agreed (rose to 75% in financial services sector) *
Work/life balance is important to millennials with 94% saying it is important to them *
These unique characteristics mean that they demand a different approach to recruitment and are looking for more than “just a job”
Source: *. Millennials at work, PwC
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14. Reasons to engage millennials
Many of your clients may be in their 50’s and part of the sandwich generation – sandwiched between adults children and elderly parents
Helping them understand their financial options at an earlier age may ensure they retain the family advisers when wealth is inherited
You can’t disassociate older customers from their children. Having an interested in the families future and wealth will prove you have their best interests at heart
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15. Saving Smarter

16. Saving smarter – What’s your financial personality?
Encourage people to think about how they could save in a smarter way for the long term
What your financial personality?
attitude towards savings,
what motivates individuals to save
budgeting
Personality type characterised by a superhero.
Savers can discover why they behave in a certain way when it comes to spending
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17. Saving smarter – “Check your future”
Our saving smarter campaign tool helps younger people understand their income in retirement based on some lifestyle questions
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18. Saving for families

19. 66% of American adult children dismissed their parents’ adviser after they inherited wealth
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20. Saving for family - Junior ISA
Available to UK resident children under age 18 who doesn’t have a child trust fund
Maximum savings in 2016/17 of £4,080
Account owned by the child
Child has the right to manage the account from age 16
And has access to the money from age 18
Automatically converts to an adult ISA at age 18
No income tax or capital gains tax on the fund
Parental settlement rules don’t apply
Need to consider the range of investments available and costs
Availability of allowances and exemptions may mean that the tax advantages of the JISA can be achieved with other investments
Child control from age 16/access from age 18
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21. Saving for family - Bare Trusts
Beneficiary is chosen at the outset and cannot be changed
Beneficiary has an absolute right to income and capital
Beneficiary can demand the trust capital is paid over on reaching the age of majority
Trustees will control the investment until the beneficiary reaches the age of majority
The trust property is taxed on the beneficiary
In practical terms the use of a bare trust is the same as setting up a JISA in that the gift is absolute and the recipient has access from age 18
Difference is that the trustees set up the investment, it is held in their name, they control the investment up to age 18, and indeed will continue to control the investment until the beneficiary demands the capital or the trustees decide to pay capital to the beneficiary.
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22. Saving for family - Bare Trusts
Bare Trust and Collectives
Parental settlement rules apply (not an issue for grandchildren and the following applies to grandchildren)
Any income is taxable on the grandchild
No tax to pay on dividends if within the personal allowance/dividend allowance
Any tax deducted on interest can be reclaimed if within the personal allowance/personal savings allowance
Annual CGT exemption available (£11,100 in 2016/17)
Bare Trust and Investment Bond
Investment Bond is a non-income producing investment
No tax implications unless there is a chargeable event
Tax is deducted within the fund at basic rates, and cannot be reclaimed so less attractive for a non-tax paying beneficiary
May be attractive for a gift from higher rate tax paying parents to a child where the parental settlement rules apply
Collectives:
The point of this is that a child has a personal allowance of £11,000, a personal savings allowance of £1,000 and a dividend allowance of £5,000 and hence for all practical purposes the grandchild will not be paying tax on their money and hence from a tax perspective it is as tax efficient as the JISA, but with better controls/choice of investments
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23. Saving for family - Discretionary Trusts
Name potential beneficiaries in the trust, but no beneficiary has a right to income or capital at any time
Beneficiaries can be changed at any time
Unlike the JISA and the bare trust this means that the person making the gift controls who will benefit and when throughout the term of the investment
The downside of a discretionary trust is the taxation of the investment
Parental settlement rules won’t apply unless more than £100 of income is paid to a minor child beneficiary of the settlor
For clarity, you would not choose the discretionary trust over a bare trust unless you want to make sure that the beneficiary has no right to the money at age 18. Where it is really important to the donor that the fund is not automatically accessible to the beneficiary at age 18, the discretionary trust is an option.
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24. Saving for family - Discretionary Trusts
Discretionary Trust and Collectives
Trust has a basic rate tax band of £1,000
Interest taxed at 20%
Dividends taxed at 7.5%
Income above £1,000 is taxed at the trustee rates
Interest taxed at 45%
Dividends taxed at 38.1%
Can consider distributing income to a beneficiary who is a lower or non- taxpayer in order to recover the additional rates of tax paid by the trustees
Discretionary Trust and Investment Bond
Investment Bond is a non-income producing investment
No tax implications unless there is a chargeable event
Likely that the tax rates will be lower than holding the investments directly
But the fund is still paying tax at basic rates, which cannot be recovered by a non-taxpayer
Segments can be assigned to beneficiaries if capital is to be distributed
Collectives
This involves completing a trustee tax return on an annual basis, and even where income is distributed it should be clear that the taxation of collectives in a discretionary trust is complex.
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25. Pensions freedoms
Allows other options to discuss with your clients to save for their families and their future
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26. Paraplanner point

27. Paraplanner Point Paraplanner resource on Aviva for Advisers:
Report writing
Tech bites
Expert insight
Tax and technical
Tools and calculators
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28. Learning objectives You now have heard:
Review of the Financial Advice Market review and the advice gap
Ideas and strategies for intergenerational planning
Opportunities to engage with millennials
A comparison of ways of saving for families – junior ISA, trusts and investment bonds
Support for paraplanners
© Aviva PLC Private and confidential

29. Important Information
This information has not been approved for use with customers and is based on Aviva’s interpretation of current law and legislation, and our understanding of HM Revenue & Customs (HMRC) practice as at 30 June It is provided for general information purposes only and should not be relied upon in place of legal or other professional advice. Both the law and HMRC practice will change from time to time and our interpretation may be subject to challenge by HMRC or other regulatory body. Aviva cannot act as legal adviser for you or your clients. You should always seek appropriate legal or other professional advice.
Aviva Services UK Limited. Registered in England No Wellington, York, YO90 1WR.
Authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority Firm Reference Number

30. We hope you are feeling inspired.
Thank you
We hope you are feeling inspired.
Aviva Life Services UK Limited. Registered in England No
Wellington Row, York, YO90 1WR. Authorised and regulated by the Financial Conduct Authority. Firm Reference Number

31. REFRESHMENT BREAK: 10h55 – 11h15