Inheritance tax updates from the government, including the planned extension of IHT to pensions from April 2027, will significantly reshape the retirement advice landscape. For the first time, unused pension funds and death benefits will fall under IHT, changing how advisers guide clients on how and when to spend their retirement savings.
Most clients are likely to be affected, creating a surge in demand for advice. For larger advisory firms, the challenge lies in handling this increase without overloading advisers, driving up costs, or reducing service quality.
This is where AI can help. Rather than acting as a simple efficiency tool, it provides the foundations for a new model of advice. Technology takes on the process-heavy tasks, while advisers devote their time to judgement, relationships, and applying expertise.
Streamlining Complex Client Assessments
Inheritance tax planning is already quite complex and time-consuming. Advisers need to review a client’s assets, goals, and estate position in full. With pensions now included, the task grows even more demanding. AI can help by:
- Automating data gathering and categorisation, reducing time spent pulling information from multiple sources.
- Highlighting tax implications across scenarios, so advisers can focus on strategy rather than admin.
- Providing quick comparisons of decumulation pathways, enabling advisers to model different outcomes and risks in minutes rather than hours.
Enhancing Adviser Productivity
The FCA has emphasised that retirement advice should centre on income goals and capacity for loss, not just capital risk. Yet many tools and processes remain focused mainly on capital. AI can help close this gap by:
- Reframing risk assessment to cover both income and capital perspectives.
- Generating personalised client materials that explain trade-offs in straightforward language, avoiding the need for bespoke drafting each time.
- Reducing rework and human error, with compliance requirements built in from the start.
This enables advisers to serve more clients effectively while maintaining quality and regulatory consistency.
Supporting Adviser Wellbeing and Scalability
One of the greatest risks for large national firms is adviser burnout. With demand increasing, firms need to maintain service quality without stretching teams beyond their capacity. AI can help by:
- Automating routine post-meeting tasks (such as meeting notes and suitability documentation), freeing time for high-value client engagement.
- Standardising processes across adviser networks, ensuring consistency while reducing the manual workload.
- Providing advisers with “intelligent prompts”, so they don’t have to start from scratch when formulating advice.
By lightening the load, advisers can dedicate their energy to meaningful client conversations rather than repetitive tasks.
Building Resilience Into Firms before 2027’s Inheritance Tax Updates
The IHT changes highlight just how quickly regulation and tax rules can reshape demand. Firms that rely solely on scaling human labour to meet spikes in complexity will find it unsustainable. By embedding AI into their operating model, large firms can:
- Absorb spikes in demand without a proportional increase in hiring.
- Share knowledge across adviser networks, reducing reliance on individuals.
- Create flexible processes that adapt more easily to future regulatory shifts.
Final Thoughts
The change in IHT treatment of pensions brings both pressure and opportunity. Clients will require faster, more tailored support, and national firms must find ways to deliver this without overstretching their advisers.
AI provides a practical way forward. By taking on the heavy lifting of process, analysis, and documentation, it allows advisers to concentrate on where they add most value: guiding clients with clarity and confidence.
Firms that invest in AI today will not only cope with the rising demand but also build the resilience needed to thrive in the years ahead.
