Only 1% of advisers back insurance bonds every time

This is despite a third of advisers admitting that until now they were largely using only insurance bonds for all their clients.

However, the research found almost half of advisers intend to review clients with insurance bonds with a view to switching them to mutual funds.

A further 26% of advisers remain uncertain at this stage whether to review, whereas a third said they would not review.

Paul Kennedy, head of trusts and tax planning solutions at Fidelity FundsNetwork, says advisers are already considering the benefits of mutual funds as an alternative to insurance bonds.

“It was encouraging to see the survey reveal that 90% of advisers understood that the decision whether to use a life bond or a mutual fund can have a substantial impact on the investor’s ultimate return.

“Almost, 100% of them recognised the value that this tax planning adds to their investment service and not a single respondent thought tax considerations were irrelevant.”

Although recent changes to CGT have not fundamentally changed the taxation of bonds and mutual funds, they have acted as a catalyst to re-focus minds on the appropriate use of mutual funds, says Kennedy.

“There remains a place for both wrappers. It is only proper that advisers continually review existing investment and where the case merits, make relevant switches, whether assets or tax wrappers.”

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