69
Q
.
Do you expect to see an increase or
decrease in BPR business in the next five
years?
Although some providers feel that
advisers/investors may be hesitant
about recommending BPR products,
all providers believe they will increase
BPR business over the next five years.
Estimates range from 15% per year to
25% per year, over the next 5 years.
Many believe that the increased
awareness and credibility of the sector
will be a major driver in market growth.
This is different from the advisers, who
felt that the growth in business will be
driven by their ageing client banks.
Q
.
In your opinion, what single
change or innovation would
improve the BPR market?
Most providers felt that a change in the
regulation of BPR would greatly improve
the market. These suggestions ranged
from obtaining published FCA opinion
on these products, to the government
being clearer on their plans for the nil
rate band in the future.
A call for increased knowledge and
education available on the sector was
noted by several providers. This is a
trend in all three surveys - there is a
definite need for more education in
the sector.
CONCLUSIONS
Overall, what the providers think and
what the advisers think is not a million
miles apart. Providers are expecting
to do more business over the next
five years, and would like to see
more certainty around the rules and
regulations governing BPR to allow them
to gear up for more business confident
that it will be time and effort well spent.
It’s clear that advisers think the industry
could be more transparent, and the
providers recognise this, but whether
any of them would take unilateral
steps to improve transparency is
another matter. And in a less than 100%
transparent environment, providers
have underestimated how much value
advisers attach to firms telling the story
of their investment philosophy and
strength of their teams.
INVESTOR SURVEY
The last survey we undertook was
of investors. We surveyed a panel
of 120 HNW investors with assets
over £500,000 and also collected 38
responses from other sources, including
some ordinary retail investors.
Q
.
How would you describe your level of
investment experience?
82% of the respondents were male
and 15% were female, 24% described
themselves as sophisticated, 69% as
reasonably sophisticated and 7% as
having little to no investment experience.
Once again, the survey was dynamic and
the questions changed to accommodate
previous responses.
Q.
Use of tax efficient investments?
Out of our panel, 63% of them did not
make use of tax efficient investments,
14% had invested in VCT, 12% in EIS, 7%
in BPR and 4% in SEIS. The low numbers
for investment in SEIS are probably
because this is a new scheme investing in
the riskiest end of the market. It makes
sense that more established EIS and
VCT schemes have more investment.
Investment in BPR was low, either
reflecting its very specific investment
objective or a lack of awareness amongst
the panel. More surprising is the high
number of investors who do not utilise
any of these tax efficient investment
products - which can either be viewed
as a disappointment or an opportunity
by the tax efficient investment industry.
The next section focuses on those investors
who do invest in tax efficient investments.
Another surprise was the age range
of BPR investors on our panel. 67%
of them were 40-50 and the 33%
were 60-70. We don’t know if this was
influenced by the online nature of the
panel survey, or if perhaps it reflects
that younger business owners who
are more aware of the reliefs are
more likely to use these products.
All of the BPR investors had made
other tax efficient investments. We can
speculate that some exposure to the
industry’s other products makes the
transition to investing in BPR easier.
In keeping with other alternative
investments, few people would sanction
a portfolio allocation of higher than
10% and certainly no more than
20%. Singling out the BPR investors,
they were a little more aggressive,
again perhaps reflecting a deeper
understanding of the issues.
100
%
0
%
“Providers have underestimated the value advisers put on their investment philosophy”
69
%
24
%
7
%
Sophisticated
Reasonably
sophisticated
Little or no
experience
SEIS
BPR
EIS
VCT
None
4
%
14
%
63
%
7
%
12
%
35%
30%
25%
20%
15%
10%
5%
0%
EIS
VCT
SEIS
Q
.
Use of tax efficient investments
(only BPR investors)
Q
.
Allocation to tax efficient
investments
Only BPR investors
All investors
<5% 5-10 >10% Unsure
%
%
% % %
