64 / 92
64
“There seems to be a general feeling that more education and information is needed to enable
advisers to feel more confident when recommending VCTs to their clients”
CONCLUSIONS
It seems that when it comes to
using VCT products, the biggest
consideration for advisers is
suitability. Unsurprisingly, the most
common reasons for recommending
VCTs were the Income Tax relief,
Capital Gains Tax free growth and the
ability to generate tax-free dividends.
However, the manager’s performance
track record and the economic
sector the fund is exposed to were
the biggest criteria when it came to
choosing a manager.
Investment risk, lack of liquidity and
lack of transparency around the
underlying investments were cited
as the biggest concerns with VCTs for
advisers.
33%
MORE
58%
ABOUT THE
SAME
9%
LESS
DO YOU SEE YOUR USE OF VCTs IN CLIENT PORTFOLIOS CHANGING
OVER THE NEXT 12 MONTHS?
DO YOU FEEL THAT THERE
ARE ENOUGH RESOURCES AND
INFORMATION AVAILABLE
TO ENABLE ADVISERS TO
ACHIEVE WHOLE OF MARKET
KNOWLEDGE OF VCTs?
WHY DO YOU THINK THE EIS SECTOR HAS RAISED OVER £12.2
BILLION IN FUNDS COMPARED TO JUST OVER £5 BILLION IN THE
VCT SECTOR?
IN YOUR OPINION, WHAT SINGLE CHANGE OR INNOVATION
WOULD IMPROVE THE VCT MARKET?
Despite this survey coming after the tightening of the regulations surrounding
Venture Capital Schemes, 33% advisers feel that they will be using more VCTs in their
clients’ portfolios, with 58% staying about the same.
It seems that the majority of advisers
(59%) believe there is an insufficient
amount of information to order to
achieve whole-of-market knowledge.
There seems to be a general feeling
that more education and information is
needed to enable advisers to feel more
confident when recommending VCTs
to their clients. It would seem that now
VCTs are becoming more mainstream
and compliance obligations have grown
since RDR, there is a greater need for
more knowledge on the sector.
When posed this question, advisers had several different opinions suggesting
the reasons why the EIS sector had raised more funds than VCT sector. The most
resounding reasons given were EIS has a shorter holding period than VCTs for
additional tax reliefs and a greater investment limit. Advisers also mentioned IHT
planning advantages, Capital Gains Tax deferral and a greater availability of EIS
investments as a reason.
There are several suggestions here that cover different aspects of the market:
Not having to describe all VCTs as very high risk investments
Better research on the sector
More information and clearer communication from providers
Greater certainty over exit
Greater tax reliefs and IHT benefits
The main development that advisers want to see is a reduction in the level of risk,
and an improved process in the analysis of information and improvements in the
secondary markets.
These final questions bring together all the advisers to understand how they feel about the future and how the market might
improve.
Yes
No
59%
41%