IHT planning and efficient gifting cited as the most popular use cases of international bonds  

New research from Canada Life UK reveals that international bonds are growing increasingly in favour amongst advisers, with the trajectory set to continue over the next five years. 

The research, conducted in partnership with the lang cat amongst advice professionals in the UK, signalled a clear direction of travel. For firms already using international bonds, (71%) say that they expect to be using them more in five years’ time than they are currently.  

Out of the firms already recommending international bonds to their clients, two thirds (66%) report doing so more often than they were five years ago. A third (33%) believe it is about the same, and just 1% say they are recommending the product less.  

Additionally, 69% of advisers expect an increase in the volume of trusts used alongside an international bond in the next five years.  

Amongst the advisers surveyed that do not currently recommend international bonds, most are of the opinion that this will change in the coming years. More than three-quarters (77%) expect to be doing so a little (59%), a moderate amount (14%) or a lot (5%) more in five years-time.  

Addressing the reasons why they choose international bonds for clients over alternatives, ‘inheritance tax planning’ (80%) and ‘gifting in the most efficient way’ (54%) were chosen in first and second place more often than ‘providing an income’ and ‘alternative ‘retirement savings’.  

When asked about the factors that determine which international bond provider they choose to use, ‘servicing’ (69%), ‘the reputation of the provider’ (63%) and ‘the range of estate planning/trust options’ (61%) were the top three factors. ‘Tax and technical support’ was also chosen by 47% of respondents. 

Sean Christian, Chief Executive, Canada Life International and Managing Director – Wealth Division, Canada Life UK said:

‘The international bond market is gaining real momentum as advisers look to solutions that can flex with changing client needs.

‘International bonds are a regulated and widely recognised solution that comprise a wide range of investments and valuable estate planning opportunities. A shifting tax landscape, with changes to capital gains tax allowances and inheritance tax, means advisers are seeing clear demand for this type of solution.  

‘With further tax changes speculated at the upcoming Autumn Budget, products like international bonds are likely to come into sharper focus as advisers look to solutions that enable clients to pass on wealth efficiently to their loved ones.’