66
Liquidity, investment risks, suitability
and the ultimate exit strategy are
all factors that are making advisers
hesitate before recommending BPR
products - perhaps indications of
where the industry can do more to
communicate their message and
assuage these fears.
95% of advisers feel that they will
do more BPR business in the next
five years. When asked by how
much, responses ranged anywhere
from 5% to a 500% increase!
There was an acknowledgement that a
potential increase in the nil rate band
causes some uncertainty but the big
driver is simply that client banks are
ageing and their assets are growing.
Some interesting comments were
also made about the products being
accepted as more mainstream, which is
a positive sentiment for the BPR market.
Q. In your opinion, what single change
or innovation would improve the BPR
market?
When posed this question, advisers had
several different suggestions on what
could improve the BPR marketplace.
Probably the two most resounding
suggestions were lower costs, greater
transparency and awareness of the
sector. Some felt that BPR is wrongly
classified as ‘high risk’ by PI providers
and that there is not enough research
and information on the sector.
For our small sample of advisers that do not recommend BPR products at all, the
investment risk to the client is the top reason for not using BPR. Other concerns
are the expected lack of liquidity, expense and transparency - similar to the list of
concerns from advisers who do recommend BPR, but this cohort remain unconvinced.
The other notable reason was the regulatory risk to their business i.e. the risk they
may face for recommending these perceived and complex products. Again, these are
perhaps indications of areas where the industry can do more to get their message
across.
“Some advisers feel that the products are being accepted as more mainstream”
More
Less
95
%
Q
.
Do you expect to do more or less BPR
business in the next five years?
Q
.
What are your
top 5 reasons
for not recommending BPR products?
Q
.
Why do you favour trusts over BPR?
Q
.
Which factor would make you hesitant about recommending BPR products?
0
0
0
0
1
1
2
Less risk
to my
business
(regulatory
risk)
Less due
diligence and
compliance
work
required
Easier to
explain to
clients
Better
established
Other
Lower risk Lower cost
Of the advisers that only use trusts for IHT mitigation, the stated reasons for using
them over BPR are a lower level of risk, less due diligence required and the ease of
explaining the product to clients.
I believe that the IHT threshold will rise
Too much due diligence and compliance work required
Too much risk to my business (regulatory risk)
Too hard to explain to clients
Fear of investing in non-mainstream asstes
Fear of investing in an esoteric tax avoidance scheme
Lack of transparency / Too hard to understand /
No past performance to assess
Too expensive
Lack of liquidity /
Concern that deal flow will dry up for the providers
Investment risk
Not suitable for my clients
Other
0
1
1
1
1
2
2
2
2
3
2
0
Unclear exit
strategy
Illiquid Too high
risk
Not suitable
for my clients
Lack of
transparency /
Not enough
supporting DD
information
Economic
sector
Other
10
0
20
30
40
50
60
70
?
?
?
?
?
?
?
