PFS predicts "austerity" Budget will boost IFA demand

An austerity Budget full of tax hikes coupled with "dumbed down" pension provision will put the services of professional financial planners in high demand, says the president of the Personal Finance Society (PFS).

Mike Fosberry is urging advisers to take advantage of the business opportunities likely to be thrown up by Wednesday's Budget, if forecast measures to generate much-needed public revenue by raising inheritance tax (IHT) and capital gains tax (CGT) are included.

Fosberry, also a director at investment manager Smith & Williamson, says an "austerity Budget" will encourage people to seek out tax avoidance vehicles.

"Professional financial planners need to get the message out that they are open for business," he says.

"We will have to have austerity Budgets for some time to come. So, for the foreseeable future, our services are never going to be more in demand," he says.

A lack of adequate employee pension provision could also lead to more people seeking private retirement planning, says Fosberry.

"Many people have no access to a pension, or only have access to dumbed-down provision, so there will be more onuses on them to save privately. Though we need incentives to help them do this."

But Fosberry forecasts any pre-General Election Budget will be mainly "window-dressing", despite recent assurances to the contrary by the Chancellor.

"The Government will be doing things to encourage job creation, and will throw around some numbers, but often, once they are broken down, these don't mean very much."

At the weekend, Alistair Darling insisted Labour would not hold a second Budget should it win the General Election and ruled out a rise in VAT.

Commentators are forecasting a 6 May General Election with the Tories still marginal favourites to win a majority.

But Fosberry says a change of Government will make little difference to the opportunities available to IFAs.

"It doesn't matter what colour Government gets in, we will have increasing taxation for some time in the future and IFAs need to be proactively helping people with this."