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ADVISER SURVEY
As with all of our industry reports, we conduct surveys of the market participants to build a picture of how the market works – how
much business is being done, which segments are successful and what obstacles stand in the way of progress.
For our first annual VCT report we have undertaken three surveys; one focused on financial advisers and wealth managers, one on
private investors and one on the VCT investment providers. The objective is to see how the advisers and investors understand and use
VCTs and see if the providers are meeting those demands.
Each survey was short and took less than 10 minutes to complete, with straightforward questions to give both quantitative and
qualitative answers. All of the results are kept anonymous and treated in the strictest confidence. We do not share underlying data
with third parties or publish it anywhere.
We regularly conduct surveys with the intention of gaining insight into how advisers perceive the different sectors we cover. This
survey was carried out over 10 days in October 2015 and was distributed through our media partners, as well as the report sponsors’
adviser communities. Overall we had 124 responses. The intention of the survey was to gauge how and why advisers use VCTs in their
clients’ portfolios, the factors that are important to them when considering a VCT product and what their concerns are.
DO YOU RECOMMEND ANY OF THE FOLLOWING
INVESTMENTS TO YOUR CLIENTS?
WHAT SEGMENT OF CLIENTS DO YOU RECOMMEND
VCTs TO?
Of those that recommend VCT investments, 44% felt that VCTs
would be suitable for both retail and HNW clients. Although this
is still a quite significant figure, it is an interesting trend that
differs from our BPR and EIS research – 63% of advisers surveyed
recommended BPR products to both categories of clients, and
in the EIS Industry Report 2014, only 16% of advisers felt retail
clients could be suitable for EIS investments. This indicates where
all three of these tax-advantaged schemes sit with advisers in
terms of client suitability.
We wanted to determine the sentiment of financial advisers
towards these investments. 67% of respondents recommended
either VCTs or EIS to their clients. Only 23% of advisers did not
recommend any of these two types of investment to their clients.
Note that there is some bias in these results as the adviser
community we reach out to are already involved in alternative
investments.
The most common reason cited by advisors for recommending VCTs (87%) was Income & Capital Gains Tax benefits. The ability
to generate tax-free dividends was the second most common reason (80%) for recommending VCTs. Client maximisation of ISA /
Pension contributions (75%) also scored highly and is perhaps linked to ever-lower pension limits.
Providing diversification and wider social or economic benefit were not seen as particularly important by respondents with 25% and 6%
respectively. Other reasons cited included using VCTs to get funds from the corporate into the personal space in a tax-efficient manner.
WHAT ARE YOUR TOP 3 REASONS FOR RECOMMENDING VCTs?
HIGH NET WORTH
56%
BOTH
44%
ORDINARY RETAIL
0%
VCT
EIS
NONE
67%
67%
23%
0% 10% 20% 30% 40% 50% 60% 70% 80% 90%
Income & capital gains tax benefits
Ability to generate tax-free dividends
Client max ISA/pension contributions
Level of returns
Provide diversification
Wider social / Economic benefit
Other
Top reason
2nd top reason
3rd top reason
49%
15%
23%
31%
8%
5%
5%
4%
3%
3%3%
3%
5%
5% 15%
10%
44%
23%
28%
21%
The next section of questions focuses on the advisers currently recommending VCTs to their clients. An overview of why the
advisers that responded that they do not recommend VCTs will be examined later in this section.