AIM Report 2019

37 36 ADVISER SURVEY HOW THE ADVISORY COMMUNITY SEES AIM This survey was conducted over a period of three weeks from mid- June to early July 2019. This is different to our previous surveys for these reports, which were conducted over the course of a year. As a result there are fewer responses than last time, but we hope this approach gives a timely and focused snapshot of the market as it appeared to advisers in those three weeks. A year can be a long time in the financial services sector, and in this instance such a long survey would have resulted in some respondents viewing the market from the depths of the volatility seen in Q4 2018, while others would have been looking at a much more positive landscape. We had 50 responses and are very grateful to all of those who participated. Their answers provide valuable insights, although it’s worth remembering that many of those we reach out to are already involved in tax efficient investments to some degree. DO YOU RECOMMEND AIM TO YOUR CLIENTS? The vast majority of respondents said they recommend AIM to their clients, with 82% stating they do this sometimes. Anecdotally, some of those who do sometimes recommend AIM admit that this is only something they have done on a few occasions, largely because they feel the conditions for the client have to be quite specific to justify an AIM investment. It shows that AIM is always on the menu for advisers, even if it’s decided that it might not be what fits with the client’s diet this time around. None of the respondents said that they never recommend AIM, compared to 32% who responded when we last carried out this survey for our 2017- 18 report. Meanwhile, the proportion of investors who frequently recommend AIM has increased from 10% in 2017-18 to 16% today. Both these results could, however, be related to the smaller sample of respondents in this year’s survey, where those that have chosen to respond tend to be the ones that are active in this market already. FREQUENTLY 16% SOMETIMES 82% NO RESPONSE 2% Market research / Adviser survey IHT planning remains the overwhelming reason for recommending AIM investments, chosen by 98% of respondents as one of their top three. It reaffirms IHT planning’s position as the dominant factor in AIM-focused tax efficient investment decisions by advisers, after it also comfortably topped the chart in our last report. This suggests that advisers see investing in AIM as an important option for Business Relief offers - something that the government has recognised and which was underlined in the Office for Tax Simplification’s inheritance tax review second report. Despite this, MICAP data shows that there were no BR offers launched in the 12 months to June 2019. Instead, newly launched VCT offers have dominated this market. Current open offers are largely historical BR schemes, and this survey would suggest there is plenty of appetite from advisers to see more of this type of product in the market. Meanwhile, growth was chosen by 58% of respondents within their top three reasons for recommending AIM. This has overtaken diversification as the second most popular reason since the last report, and may reflect the recent proliferation of AIM-based VCT products, with the attendant need to focus on a higher risk to capital and therefore on higher growth companies. Track record remains one of the key differentiators in the minds of the majority of advisers, with 68% picking performance history among their top three criteria for selecting AIM funds or shares. This has been the top choice in our previous two reports, demonstrating the value that advisers place on an ability to show good past performance to clients. Together with the third most favoured choice - provider reputation (50%) - this shows the importance that advisers and their clients place on historical success and effective management. Transparency of underlying investments is the second most favoured choice among the respondents and this may reflect the fact that those utilising AIM will often be more mature investors with a broader experience of investing: they are keen to be able to see and understand what it is that they are investing in. Interestingly, ‘third party reviews’ has become much more popular with advisers since our last report and was listed in the top three criteria by 42% of respondents. It has overtaken previous experience with the provider, suggesting that advisers are becoming increasingly confident in the AIM market and rather than simply staying with the same manager, are branching out to find alternative options for their clients. WHAT ARE YOUR TOP 3 REASONS FOR RECOMMENDING AIM? WHAT ARE YOUR TOP 3 CRITERIA WHEN SELECTING AIM FUNDS OR SHARES? 1 IHT PLANNING 56% 2 GROWTH 55% 3 DIVERSIFICATION/RISK MANAGEMENT 38% TAX PLANNING (NON IHT) 35% EXPOSURE TO A SPECIFIC SECTOR 12% OTHER 8% INCOME 4% POSITIVE ECONOMIC/SOCIAL IMPACT 4% 1 PERFORMANCE HISTORY 68% 2 TRANSPARENCY OF UNDERLYING INVESTMENTS 60% 3 PROVIDER REPUTATION 50% THIRD PARTY REVIEWS 42% PREVIOUS EXPERIENCE WITH THE PROVIDER 30% INVESTMENT PROCESS/ON PLATFORM 24% IHT planning still tops advisers’ reasons for recommending AIM