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A. Respondents were able to choose more
than one answer to this question. Focusing
only on the 58 respondents that do
recommend EIS investment to their clients
– 91% cited tax benefits as one of the main
reasons to recommend EIS investments
and 61% said that diversification was a
key reason for recommending them. The
level of returns and client engagement
were not seen as particularly important
by respondents with 30% and 35%
respectively. The tax benefits will often
reduce the risk and magnify returns,
but they may only really be beneficial
for higher rate tax payers or investors
looking to offset large capital gains.
ADVISER SURVEY
A. EIS investments are often higher risk as
they focus on small start-up companies, but
in return the investor is given generous tax
benefits and is often rewarded with higher
returns. We wanted to gauge how financial
advisers viewed EIS investments and how
they use them with their clients. Almost
three quarters (74%) of survey respondents
recommend EIS investments to their clients.
The remaining 26% do not recommend EIS and
the reasons for this have been analysed
INTENTION OF THE SURVEY
Our intention was to gain an insight into
how advisers perceive EIS investment
products – how they use them within
client portfolios, what criteria they use
to select EIS investments, and what they
look for and expect from EIS managers.
The survey sample also included advisers
who do not currently use EIS investments.
We wanted to find out what factors make
them hesitant – is it down to the type of
clients they service, their perception of
the risks attached to EIS or the difficulty
in understanding EIS and ensuring they
have whole of market knowledge?
The survey did not ask questions about
specific managers, we wanted to establish
a general view on EIS managers and
investment opportunities. The survey was
conducted as an independent exercise
solely for inclusion in this report.
By participating in the survey, we hope
that the responses and opinions provided
by advisers can help to shape future
EIS offerings. These responses allow us
to draw out trends and developments
within the market, which will ultimately
enable EIS managers to develop their
propositions and deliver products that
best meet the needs of investors.
The survey was sent to a database of
advisers (both independent and restricted),
financial planners, wealth managers and
financial intermediaries. Respondents
were provided with an incentive to
participate in the survey with the chance
to win £250 in shopping vouchers and
receive a free hard copy of this report.
The survey included up to a maximum of
20 questions and was dynamic – questions
changed depending on the answers given
and the route the respondent took. The
most interesting and insightful questions
have been selected as part of this analysis.
We had 78 respondents to the survey,
including a mixture of IFAs, paraplanners,
restricted advisers, wealth managers
and financial intermediaries.
Q. What structure of EIS
investments do you most commonly
recommend to clients?
A. Participants were asked whether they
recommend a discretionary managed fund
(portfolio) of EIS investment companies,
single company EIS investments or both
to their clients. A discretionary managed
fund allows the adviser to benefit from the
expertise of an investment manager, rather
than having to research each underlying
company individually and choose the
company that best suits their client – which
takes time as well as expert knowledge.
Discretionary managed EIS funds also
provide diversification as investor’s money
is spread across a number of underlying
companies. This does mean though that
the adviser is putting their faith in the
knowledge, experience and expertise of
the investment manager and that the client
has to pay an additional layer of charges.
The majority (44%) of respondents
recommend both discretionary managed
funds and single company EIS to their
clients. 39% only use discretionary
managed funds and a small number
(17%) solely recommended single
company investments to their clients.
Q. Do you recommend EIS investments to your clients?
Q. For what reasons do you recommend EIS investments to your clients?
