The latest figures from the ABI indicate that the market for offshore single premium bonds sold in the UK has increased from £4.8bn in 2005 to £7.1bn in 2007 - an increase of almost 50%. This is after a 63% increase in 2006 over 2005. This is a big and growing market - so are you getting your fair share?
Our own figures make us think only around 20% of IFAs who are involved in recommending offshore business. Given the increase, this means there is a small number how are producing significant amounts of business.
Previous blogs have identified client trends that make offshore life contracts an ever more popular choice. They include:
- Clients included in a population growing older and wealthier (on average) looking for tax advantages and superb investment choice
- Clients with growing need for Inheritance tax Planning
- Corporate investments looking for tax advantages and returns better than their returns from deposit accounts
- Increased mobility of individuals meaning more are working or living in a different country (this covers both expats and inpats) and look to avoid tax when it is not, or may not be due
- Enhancing retirement planning by using offshore contracts when clients are unable or unwilling to invest in a pensions contract
Many readers may think, “well, he has banged on about all this stuff before and I am still not convinced”. Fair enough. However, there is also one other bit of information in the new figures. To date, we have always understood the market to be such that almost all of the business has been introduced by IFAs. The latest figures are showing a different picture. The IFA figure is now under 90%.
The figures do not show which companies are introducing or receiving this business, which means all we can do is speculate. Are the multi-tied advisers entering the market? Are the banks becoming active? It is interesting to consider why. Could it be that these are “new” operations, who have taken an objective look at what product fits where, rather than just doing what they have always done? Alternatively, is it that the offshore bond industry still needs to do more to outline these opportunities to IFAs?
This is clearly a growing market – I just hope everyone is in the best position to get their share.
Steve Whalley is head of marketing at Aegon Scottish Equitable.
The views expressed are those of the author and not those of the company he represents.IFAonline
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