Bank of Mum & Dad “needs financial advice”

Jul 17, 2020

32% of parents would value advice on how best to give money to children and would also like government support with guidance and tax breaks, according to new survey from Openwork.

62% of parents would welcome government-backed guidance on how to make gifts and loans, while 71% welcoming tax incentives to help children onto the housing ladder through the Bank of Mum and Dad.

According to the London School of Economics, the Bank of Mum and Dad is currently the UK’s sixth biggest mortgage lender, with families lending or gifting over £6 billion to help offspring onto the property ladder last year.

Openwork’s study found that the average donation will be £24,100, increasing to £31,000 in London.  However, despite this, parents are highly unlikely to have any financial qualifications and would value financial advice to support them when considering how best to pass money onto their children, the firm said.

The research shows many parents still think that the Bank of Mum and Dad should only be used for emergencies, with well over half of those surveyed in the study  – 60% – saying that financial support should be a last resort.

John Cupis, mortgage director at Openwork, said: “As part of one of the UK’s largest mortgage lenders, parents clearly feel they need more financial insight to enable them to make the most appropriate decisions on helping children financially.

“It seems that few take legal or financial advice and considering the sums often involved, it is would be a good idea for parents to seek financial advice from a qualified financial planner so that they are able to make sound, rational and above all sensible decisions.

“Parents are often faced with a difficult choice between supporting their children or investing in their own retirement. This is when a financial adviser can really help, sitting down with parents and talking through the available options to ensure wherever possible they can both support their children and have enough income available for the future.”

Article originally posted by Best Advice