Written by Phillip Wickenden, CEO of Ad Lucem
“I only wanted £40,000 for the kids’ deposit… why has the tax bill felt bigger than the deposit itself?”
If you’re an adviser, you’ll recognise the familiar tangle – not recklessness, just competing needs landing at once. The shift heading into 2026 is disarmingly simple: families are pulling liquidity decisions forward. They need cash – for spending, gifting, helping children, building a care buffer – and they’re acting now, not “sometime later”.
The FCA’s retirement income market data tell the story – withdrawals increased to £70.876bn in 2024/25, while only 30.6% of first-time access involved regulated advice. That isn’t noise. It’s a behavioural flare: “we’re accessing money earlier, in bigger chunks.”
But here’s the key point – because it’s where our industry often gets the movie wrong. The opportunity is not “pension withdrawals are up, therefore equity release.” That’s a product conclusion pretending to be a client insight.
The cleaner opportunity is this: advisers need a repeatable, Consumer Duty-aligned “which pot?” conversation – defensible, consistent, and easy to run at scale. The real question is: “When we need cash, which asset do we use first – and why?” If your process doesn’t answer it, clients will still decide. They’ll just do it without you. The new risk isn’t choosing the wrong product – it’s clients making one-way ‘which pot?’ decisions outside any defensible process.
2027 quietly breaks the old sequencing autopilot
For years, many families treated pensions as the “clean” pot – the one you try not to touch because it’s efficient to leave to the next generation. From 6 April 2027, that comfortable assumption becomes harder to defend. Most unused pension funds and death benefits are brought into inheritance tax calculations, which shifts the default sequencing logic for a meaningful number of ordinary, affluent households.
HMRC’s impact analysis suggests around 213,000 estates with inheritable pension wealth in 2027/28, 10,500 are expected to become newly liable for IHT, and 38,500 to pay more. So, this lands in mainstream reviews, not edge-case planning. In other words: sequencing is moving from back-office optimisation to front-of-house reassurance.
Three client problems you’ll see more often
1) Tax friction.
The risk isn’t that clients take money. It’s that they take it in the wrong way – and the tax bill ambushes them. (PAYE has a particular talent for turning a “quick lump sum” into an emotional event.)
2) Legacy logic shifts – and the trade-off isn’t just tax.
When we say “what’s the trade-off?”, advisers instinctively reach for the spreadsheet: tax, charges, growth, time horizon. All essential. But financial plans aren’t executed in Excel; they’re executed in real life, under stress, with family watching. So, the trade-offs are financial. But they are also mental and emotional – peace of mind, regret-avoidance, family fairness, fear of running out, the need to feel in control.
A familiar composite: a widower wants to help his daughter with a deposit. The numbers say: “take it from the pension; it’s liquid.” The household reality says: he has two children, one is thriving, one isn’t, and “fair” has suddenly entered the chat in chunky platform-sole certainty. If he pulls £40k quickly, the tax bite is one problem. The bigger one is the family story it creates. The trade-off isn’t just “tax now vs tax later”. It’s “help now vs family politics later”, “simplicity vs perceived fairness”, “speed vs regret risk”.
This is why the new sequencing conversation can’t be “best pot on paper”. Advisers need a repeatable process for surfacing objectives beyond the numbers: what the client is trying to protect, what they’re trying to avoid, and what ‘good’ feels like in their household – then documenting it in plain English: why this pot, why now, what we’re trading off, what gets reviewed.
3) “Help now, not later” has gone mainstream – and property is often funding it.
Legal & General’s “Bank of Family” research estimates that family support helped fund 42% of homes bought by buyers under 55 last year. Strikingly, only 1 in 4 Bank of Family supporters sought financial advice before offering help – and a separate release notes 19% used their own property wealth to do it (downsizing, equity release or remortgaging).
Put simply: the “which pot?” problem is now a family problem – and the biggest pot sitting behind it is the home. Ignore that, and you end up talking around the real question. And once you accept that, the home stops being a ‘later’ topic and it becomes part of the options set, even when the answer is no.
Why the home rises up the agenda (even when it isn’t the answer)
Two more behavioural realities make “home-in-the-plan” unavoidable.
First: the tone has subtly changed. Clients are rate- and fee-literate, they want optionality, and recommendations increasingly have to survive a kitchen-table audit with partners and adult children. That’s why “home-in-the-plan” has to be an options-led process, not a product moment.
Second: downsizing is often a fantasy plan. Aviva found 77% of homeowners aged 55+ feel emotionally attached to their home; 47% wouldn’t move even if they won millions; and 17% would never sell, regardless of the offer. Familiarity and comfort aren’t “soft” reasons – they are the reasons people actually act on.
So, the planning question becomes: do you want these decisions to be broker-led and reactive, or advice-led and structured – with alternatives considered, trade-offs explained, and understanding properly checked?
What a modern “home-in-the-plan” conversation sounds like
In a recent practitioner report I wrote with Technical Connection for Air (“The home belongs in the plan”), the point isn’t “sell a loan”, but build a repeatable, options-led process that includes property on merit. A modern later-life lending conversation shouldn’t start with a product. It starts with an objective: “What are we trying to achieve – and what matters most?” Then you run the options: cash, portfolio, pensions, downsizing, family help, do nothing – and only then place the home on the table as one lever, not a foregone conclusion.
The infrastructure is simple: keep alternatives visible; explain costs and trade-offs in plain English; show the repayment pathway (interest serviced vs rolled up); and end with a teach-back recap in the client’s own words.
The compliance nuance matters too: where property is the dominant store of wealth, ruling the home out by habit rather than merit risks foreseeable harm by omission, not just action. That’s a Duty-safe way to explain why this belongs in the core toolkit.
For networks, platforms and providers, this is as much a governance question as a planning one – approved wording, an alternatives checklist, simple cost explainers, teach-back prompts, and a short evidence-note template. In a Duty world, that infrastructure reduces risk – and wins distribution mindshare.
The business case – and the valuation case
Air’s analysis does something advisers appreciate: it puts numbers around capability. It estimates the one-off investment to build a Duty-safe later-life lending proposition, and sketches economics that imply payback within a manageable number of cases.
But the bigger point is what that does to firm value. Advice businesses don’t get valued on how elegant the plan looks. They get valued on repeatable profit – and how confident a buyer feels that profit survives life events. A documented “which pot?” process that keeps families through deposits, divorce, care worries and “can you help my daughter?” moments doesn’t just add a revenue line; it reduces AUM leakage and increases intergenerational stickiness – exactly the kind of durable earnings buyers pay up for.
A practical close: the 90-second “which pot?” triage
If you want one thing to take into the next client meeting, make it this:
- Is this money for now or money for later?
- Do you want certainty or flexibility?
- Is this decision for you, both of you, or the family?
- What are we most trying to avoid: tax drag, selling at the wrong time, or family regret?
In your file note: (1) objective in the client’s words, (2) options considered, (3) why this route best met their priorities, plus the review trigger.
Answer those, and later-life lending stops being an awkward “product conversation”. It becomes what it should have been all along: a disciplined way to fund real life – safely, transparently, and with the home treated as part of the balance sheet rather than the elephant in the room.
Phil will be joining an upcoming special episode of Mortgage and Property Investment Magazine’s IFA Talk, releasing on February 9th, 2026!
Be sure to stay tuned – the episode is focused on looking ahead to 2026 and beyond, exploring how household behaviour is changing, what this means for retirement sequencing, and why property wealth and later-life lending are becoming increasingly central to modern financial planning.
Phill Wickenden is CEO of Ad Lucem
