Earlier this month GBI Magazine, in partnership with the Deepbridge Technology Growth EIS undertook a research survey of financial advisers and paraplanners focused on the Enterprise Investment Scheme (EIS). The 12-question-survey sought to assess how advisers use EIS as part of their financial and taxation planning, asking key questions around the rationale for using such products and what research they undertake in advance of advising clients.
Speed of deployment
An important point that has emerged from the data relates to the relative and perceived importance amongst advisers on the speed of deployment. 90% agreed that this was fairly to very important in their considerations and to the comparative analysis that they undertake when researching EIS products.
Growing use of EIS
In keeping with a general perception within the sector there is also an increasing interest in using EIS funds as part of their planning and creating a balanced portfolio. Over 52% of respondents expect their use of EIS to increase over the next two years and 90% of advisers are considering EIS funds for their clients. Nearly half said they utilise EIS as appropriate in their planning and almost a third of those who responded confirmed that they regularly consider EIS investments as part of their financial and tax planning. The data also confirms that EIS investing is marginally more popular than VCTs, with 43% advising on EIS and VCT equally but 30% utilising EIS compared to 27% utilising VCT more regularly.
Andrew Aldridge, Partner and Head of Marketing at Deepbridge Capital commented:
“The results from this survey reaffirm our understanding that financial advisers and paraplanners are increasingly seeking alternative investment opportunities, with EIS being at the heart of such planning. Of course it’s also great to see that Deepbridge is so well regarded.”
Creating equity portfolios
Over a third of advisers agreed that they see EIS as a route to creating private equity portfolios of growth-focused private equity stocks. 33% told us that they believe this to be as important as tax planning considerations with 4% believing this to be the main reason for recommending an EIS investment. Furthermore where tax planning is the main reason for recommending EIS, then 35% of advisers believe income tax relief to be the primary driver, along with CGT deferral (11%) and IHT mitigation (19%) with 35% responding that all EIS reliefs are as equally important.
Respondents cited 29 individual fund managers that they consider when recommending EIS to clients but the clear leader and most commonly used EIS Manager, named by over 25% of advisers and paraplanners was Deepbridge Capital, followed by Octopus with 20%.
At the heart of the survey was the collection of important research amongst advisers. Now valuable feedback and analysis can be carried forward building on the research we have collated and we offer our thanks to those who took the time to complete the survey for us.
Alex Sullivan, Managing Partner, IFA Magazine Publications said :
“We believe that this highlights increasing adviser and investor appetite for EIS, whether that be for tax planning purposes or as access to early-stage private equity portfolios. The tax reliefs available under the Enterprise Investment Scheme are unparalleled and create a great incentive to support growth-focused companies that will form the back bone of the UK’s economic recovery.”
As we move into the Autumn the Team at IFA and GBI Magazine will be stepping up a gear working with partners to ensure that advisers receive timely and insightful content that builds on the momentum we are seeing in the EIS sector.