The majority of investors still regard offshore funds as a way for criminals to hide money, shocking...
The majority of investors still regard offshore funds as a way for criminals to hide money, shocking research from Standard Life International has revealed. Despite the long-term move to legitimacy by the offshore finance industry, 55% of people still believe that offshore investments are homes for crooks' cash.
"It is clear that providers and advisers still need to focus on education to enable consumers to understand the tax planning advantages associated with offshore bonds," warned Murray Drummond, chief executive of Standard Life International.
The company's research also revealed that 53% of people believe offshore investment is simply a way to avoid paying tax, while only a quarter of people think that offshore investments are secure.
The gulf between reality and people's perceptions comes as something of a surprise. "The offshore bond market has seen spectacular growth in the last couple of years," Drummond pointed out.
"Offshore bonds can be a particularly attractive option for clients who will not be paying UK tax in the future. For example, when money is earmarked for a non-taxpayer, such as a child, or if a client plans to move abroad.
"With a quarter of those surveyed likely to move or retire abroad in the future, the offshore market is an increasingly important area of financial planning for advisers," Drummond said.
He said that rather than being bad news for the industry, the survey results present an opportunity. "The ability to defer tax, and the tax mitigation opportunities associated with the offshore market, offer advisers a real opportunity to show the positive benefits of professional advice," he added.
The research also revealed that only a third of people surveyed said they knew what a hedge fund was, but when probed for a definition the majority did not know. Only one in 10 people said they would buy a hedge fund while six out of 10 said they definitely would not.
Less than half of people asked knew that moving abroad could affect their tax status, which confirms that education is crucial when it comes to advising people.
l Standard Life International is launching a wide-ranging offshore bond at the end of February. Full details were not available at the time of going to press but it is to be a portfolio bond with a full range of investment options.
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