Zurich has launched software enabling advisers to assess the comparative returns from UK investment bonds and unit trusts.
The Zurich Wrapper Comparison shows the total cash return from the different product wrappers and the relative annual return.
The adviser can include various levels of income and withdrawals, optimise annual capital gains tax (CGT) exemptions, and show the effect of changes to the client’s tax rate over time.
Paul Wright, investment management director at Zurich, says the idea for the tool emerged because industry commentators were comparing investment bonds and unit trusts based on either the supposed tax advantages following the Budget, or the charges, never both.
“Too much comment focused on only one aspect of the comparison,” he says.
Zurich says the comparison tool helps advisers to be better equipped to identify the most appropriate solution for their clients.
Wright says advisers should not use the tool as an “illustration” to their clients but adds it will aid their bid to meet the FSA’s treating customers fairly principles and MI rules.
“The changes to capital gains tax have had unintended consequences for advisers who are coming under increasing pressure to justify product wrapper choice,” he adds.
“Too much comment is often focused on only one aspect of the comparison.
“We want to help advisers and their clients to make informed decisions about their investment choices and with the tax rules built into the model the adviser can select the appropriate asset mix, investment returns and the level of charges.”
David Ingram, a partner at threesixty services, says: “This tool allows advisers to look at the key areas of difference between the two product types and not just the marginal differences which the Budget announcement introduced.”
Both Clerical Medical and Standard Life have launched similar tools this week.
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From 6 April 2019