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Increased demand for ESG options in onshore bonds

But advisers worry about a lack of investment choice in onshore bonds 

Advisers are seeing an increase in demand for ESG and sustainable investment options in onshore bonds as the market expands, according to new research among 100 UK based wealth management advisers, by HSBC Life –  the HSBC Group’s insurance business.

Its Adviser Study found nearly two in five (38%) wealth management advisers have seen substantial growth in demand from clients for ESG and sustainable investment propositions and a majority (60%) are reporting moderate or slight growth.

The Bonds Pulse Survey from HSBC Life found a perceived lack of investment choice is the biggest barrier facing advisers when recommending bonds to clients.

The vast majority (84%) believe it’s an issue for clients, and two thirds (61%) feel that clients’ lack of knowledge or understanding is a major barrier; the same volume (61%) say their clients believe onshore bonds are too expensive.

HSBC Life’s survey indicates that over half (54%) use platforms ‘in most cases’ when they recommend bonds to clients, and only one in five (23%) ‘always’ use them when recommending bonds.

The top three key features that advisers seek when choosing onshore bonds, are: a ‘range of trust options’ – this is the top functionality for over two in five (46%); followed by ‘flexible adviser fee options’ (42%); and ‘large range of funds’ (40%).

Commenting on the survey, Mark Lambert, Head of Onshore Distribution at HSBC Life (UK) Limited, said: “ESG and sustainability are an increasingly vital element of the investment options available across the fund management industry and that also applies to onshore bonds.

“Advisers are already seeing a rise in demand for ESG funds in their client conversations and that appetite will only grow. It is important that the open architecture onshore bond providers continue to expand their range of ESG funds. This will in turn help in addressing misconceptions among some clients around lack of investment choice.

“HSBC Life has aspirations for significant growth in the onshore bonds market and our priority is to offer advisers and their clients investment choice, transparency and value supported by the highest levels of service.”

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. It offers clients access to 3,800-plus funds via open architecture.

The HSBC Onshore Investment Bond combines investment choice, tax-efficiency, and minimal administration costs. It allows the policyholder to hold collective investments for flexibility and tax planning purposes and 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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