Advisers expect a drop in unit-linked bond business next year but do not believe it will be as bad as forecast, Defaqto research suggests.
In its latest report ‘Unit Linked Bonds in the UK’ Defaqto examines the pressures that are undermining the savings instruments and how they will affect their appeal to investors.
It considers the likely impact of the proposed introduction of the 18% flat rate of CGT, the implications of the Retail Distribution Review (RDR), the growing importance of fund supermarkets, and how life companies are likely to react to the growing influence of multi-manager propositions in the consumer investment field.
However, while all these influences are likely to cause serious challenges to the life companies, the report is far from pessimistic about unit linked bonds.
As a result of CGT changes, IFAs are predicting a drop in business, with 71% seeing a fall of up to 25%, but it is far from terminal.
Speculation proclaiming the death of unit-linked bonds “seems greatly exaggerated” as 11.5% expect a drop in business of more than 75%.
In addition, 50% of advisers who currently do not recommend them said they would consider them again in the future.
Fraser Donaldson, Defaqto principal consultant, investment, says: “While unit linked bonds are going through a rough patch at the moment, the product still has attractions and, provided these are capitalised on and properly promoted by the insurers, unit linked bonds will have an enduring place in many investment portfolios.”
020 7034 2636
First mentioned in Cridland Report
Second acquisition of 2019
Guy Opperman has rejected calls to speed up changes to auto-enrolment (AE) despite increasing pressure to boost contribution rates and overall savings pots.
Four key areas to focus on
And 94% for critical illness