EIS Industry Report 2018/19

57 56 6. DO YOU FEEL YOU HAVE THE APPROPIATE KNOWLEDGE AND TOOLS TO ADVISE ON EIS INVESTMENTS? Advisers are mostly confident in their ability to advise on EIS. This is encouraging, considering EIS is a relatively complex product. Advisers who are less familiar with the workings of EIS would benefit from Intelligent Partnership’s e-learning course on EIS. More details can be found at www.intelligent-partnership.com. 10. DO YOU SEE YOUR USE OF EIS INCREASING OR DECREASING OVER THE NEXT TWO YEARS? Over 56% of advisers see their use of EIS increasing over the next two years. Just under 2% see their use of this product decreasing. EIS is likely to become more popular, as wealthier investors struggle to find methods of investing their money in a tax-efficient manner. We are also going through a period of technological innovation, with things like AI, blockchain, and machine learning disrupting latent sectors and producing compelling propositions to investors. EIS gives investors an opportunity to be a part of these exciting projects. 4. WHAT ARE YOUR TOP THREE CONCERNS WHEN SELECTING EIS? 5. 50% OF OPEN EIS OFFERS NOW HAVE A STRONG TECHNOLOGY FOCUS. ARE YOU COMFORTABLE IN RECOMMENDING EIS TECHNOLOGY INVESTMENTS TO YOUR CLIENTS? Most advisers appear to be reasonably confident about advising on technology investments. This is encouraging considering the high proportion of technology investments in the EIS market. Exit risk Compliance and Due Diligence No Track Record HMRC Challenge Sector Reputation Investment risk Lack of liquidity Suitability Lack of Transparency Other 61% 51% 38% 36% 28% 23% 20% 5% 4% 30% YES NO SOMEWHAT 7. WHAT AGE RANGE DO YOU BELIEVE EIS IS NOW MOST SUITABLE FOR? The majority of advisers (51%) believe that EIS is most suitable for the 55-65 age range. Investors of this age demographic tend to have built up the majority of their wealth by this point, whilst still being able to reap the rewards of a growth investment. What is interesting is the proportion of advisers who are recommending EIS to older clients. Over 24% of advisers believe that EIS is most suitable for investors aged 65 and over. Of course, there are IHT mitigation benefits to EIS. However, older investors tend to favour a period of capital preservation at this stage in their lives. 9. AFTER THE RULE CHANGES TO EIS IN 2017, ARE YOU MORE LIKELY TO: Over 42% of advisers are looking to diversify across more managers, given the rule changes from 2017. This also matches up with the increased risk profile of EIS, and the change in the manager landscape. However, just under half of the advisers surveyed said their approach to the amount of managers used would, in fact, stay the same. 8. DO YOU FEEL THERE IS ENOUGH CHOICE IN THE MARKET IN TERMS OF EIS OFFERS? The majority of advisers feel that there is either enough choice in the market, or feel that there could be more choice. Although there has been somewhat of a dip in the number of offers available to prospective investors, there are still many more options available compared with VCTs. DIVERSIFY ACROSS MORE MANAGERS PICK FEWER MANAGERS STAY THE SAME 56% 42% INCREASING STAY THE SAME DECREASING 2% 35% 9% 56% 51% 2% 22% 20% 3% 1% Over 75 65-75 55-65 45-55 35-45 Under 35 42% 9% 49% TOO MUCH CHOICE ENOUGH CHOICE COULD BE MORE CHOICE NOT ENOUGH CHOICE NOT SURE Market Research / Adviser Survey Analysis Market Research / Adviser Survey Analysis Investment risk comes out as the top concern for advisers in our survey. This comes as no surprise, and matches up with the now increased risk profile of EIS. Exit risk is another top concern, with over 51% of advisers citing it in our survey. Last year, 47% of advisers cited compliance and due diligence as a top concern. This year, that figure is down to 36%, which shows that advisers are more confident in the validity of EIS as an investment vehicle. 2% NO 51% YES 47% SOMEWHAT 1% 39% 37% 11% 12%