GBI Magazine’s question series returns, as we aim to find out our readers thoughts and views on some of the topics dominating the financial services and investments sector in 2024. Our most recent focused once again on a diverse range of influential topics being widely discussed, this week, we aimed to find out which type of investment offers the most potential in the current economic environment, how tax-efficient investments play a role in clients portfolios in the near future, and the bigger concerns that advisors and have when recommending tax-efficient investments to clients in todays in todays economic climate. We’ve covered a range of aspects that advisors must think about when it comes to tax-efficient investments, and Industry professionals have sine shared their views, the results have now been listed below.
1) Which tax-efficient investment do you believe offers the most potential in the current economic environment?
Based on the results of the research, 100% of participants stated that they believe that EIS (Enterprise Investment Scheme) offers the most potential in the current economic environment, the remaining options of VCT’s, ISAs, Pension Contributions, and AIM IHT Portfolios did not perform as favourably in the research. There are a number of reasons as to why EIS may be perceived as the most appealing choice for advisers when recommending options to clients. Benefits include significant tax relief, which is a standout element for clients. EIS can also be perceived as being ‘high risk, high reward’ in terms of opportunities, and can vastly provide the opportunity to be apart of unique and innovative advancements and developments. All are definitive positives that can stand out highly to clients, making EIS the ‘go to’ option.
2) With rising inflation and market volatility, how do you see tax-efficient investments playing a role in your clients’ portfolios over the next 12 months?
Question 2 aimed to determine how participants see tax-efficient investments playing a role in their clients portfolios over the next 12 months, 100% of participants selected that they believe that ‘Moderately increasing allocation’ will be the most prominent. The remaining options of ‘significantly increasing allocation’, ‘reducing allocation’ and ‘no change in allocation’ are not factors that participants highlighted to make as major of an impact in comparison to a moderate increase. A moderate increase is not drastic, but more of a stable expectation of how tax-efficient investments will impact their clients portfolios and will focus on capital appreciation and income by investing into the stocks, bonds, and cash areas. It is clear that from these findings that all advisers that participated in this question have a similar outlook on their client portfolios over the next year.
3) What is your biggest concern when recommending tax-efficient investments to clients in today’s economic climate?
The final question of this weeks research aimed to find out what participants biggest concern is when recommending tax-efficient investments to clients in todays economic environment, equally, 50% of participants opted for performance volatility, and liquidity constraints when it comes to their biggest uncertainty and concern. Regulatory changes, high risk of capital loss, and complexity of tax rules were not stated to be of major concern in the current economic climate, due to being overshadowed by the uncertainty surrounding volatility and constraints. This gives an insight into what advisers and the industry alike may need to keep an eye on in regards to the economic climate in the near future.
We would once again like to say a huge thank you to each and every one of our readers and followers who got involved with our most recent question series, we highly value being able to gain insight into our readers views and thoughts on many of the factors influencing our industry. Be sure to keep an eye out on our GBI Magazine, and IFA Magazine‘s social media accounts for our next topics of focus!
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