I was at the Insurance Institute of London (@IIL_London) this week to talk about EIS – specifically the key considerations for advisers. (http://goo.gl/DLLngv)

As part of my talk, I argued that simply by virtue of focusing on their chosen career, being on the property ladder and diligent saving over the last 20 to 30 years, many baby-boomers are now contending with some real financial planning issues that they never expected to – namely CGT and IHT liabilities, maxed out pensions and ISAs, and large income tax bills.

I then argued that the tax benefits associated with EIS were uniquely suited to address these financial planning needs. So we have a (large) cohort of clients who are not necessarily sophisticated and not necessarily risk takers, but who do have capacity for loss and do have a requirement for these sophisticated products.

So do we let the tax tail wag the investment dog? Should these “unsophisticated” clients be denied access to products that could potentially solve a lot of their problems?

I was asked this at the talk, and I responded (perhaps a little clumsily) that I thought it was about being able to educate the clients so that they can make up their own minds – but then where does education stop and advice (or persuasion) start? Would a client be more angry at being put in a sophisticated investment that subsequently failed? Or at not being allowed to access a product range that would have saved them a lot of money?

I was able to duck the question, but this is the tightrope advisers have to walk every day. One more reason why I think billing the client, rather than taking commission, is a much better model (for the clients who can afford it).