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High net worth clients key for onshore bonds

Advisers confirm high net worth clients, those close to retirement and clients looking for income and inheritance tax solutions are major sources of demand

High net worth clients looking to spread their investments are identified as a core demographic for the ongoing growth in demand for onshore bonds. This is according to new research from the latest Bonds Pulse Survey from HSBC Life – the HSBC Group’s insurance business – carried out among 100 UK based wealth management advisers.

The survey indicates that over two in five (44%) wealth advisers believe high net worth clients are the most important segment driving demand for bonds, ahead of traditional sectors such as clients close to retirement and those looking for income and inheritance tax solutions.

The Bonds Pulse Survey from HSBC Life, which has grown to become a significant provider of open architecture onshore investment bonds to the adviser marketplace, also highlights that traditional client segments still remain important for advisers.

More than a third (36%) of advisers say onshore bonds are most suitable for those clients who are five years from retirement, while over a quarter (26%) believe they are most suitable for clients looking for income or seeking to mitigate inheritance tax.

HSBC Life’s study found wealth advisers are increasingly focused on financial strength and trusted providers when selecting onshore bonds to recommend to clients. Nearly two out of three (63%) selected ‘financial strength’ as the key consideration for choosing a provider ahead of ‘trust’ (44%).

Breadth of fund choice, adviser support, availability on platforms, brand name and ESG fund choice were also identified as key considerations.

HSBC Life’s research found advisers’ fear of global recession is their biggest concern regarding returns from all asset classes – with nearly half (48%) worried about the risk over the next five years; nearly two-fifths (39%) are concerned about the risk of inflation, while a third (34%) point to possible market corrections and concerns about equities being over-valued.

Mark Lambert, Head of Onshore Distribution at HSBC Life (UK) Limited, said: “Onshore bonds are increasingly viewed as being suitable for a wider range of clients. Traditionally, demand for bonds is driven by the three I’s of investment, income and inheritance. Our growth in recent years has been helped by Wealth Advisers re-evaluating the investment and financial planning solutions provided by Onshore Bonds for their high net worth clients. We see this continuing and especially whilst the current caps are in place on investment limits for pensions and ISAs.

“HSBC Life has aspirations for further significant growth in the onshore bond market, and we are dedicated to offering advisers and their clients the highest levels of service, underpinned by a wide investment choice, transparency and value for money.”

The HSBC Onshore Investment Bond has a minimum investment of £15,000 and is a medium to long-term lump sum investment providing the potential for capital growth while still allowing clients to make withdrawals from their investment.

The HSBC Onshore Investment Bond combines investment choice, tax-efficiency, and minimal administration costs. It allows the policyholder to hold a range of collective investments covering unit trusts, OEICs, ETFs and Investment Trusts, providing the flexibility for an adviser’s clients to maintain a consistent strategy across their overall investment portfolio.

HSBC Life (UK) Limited does not replicate funds offered by external fund managers. It invests in the funds directly and as a result is able to offer a competitively priced proposition.

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