Determining an evolutionary moment for tax efficient platforms

Hardeep  Tawakley
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David Lovell, Operations Director
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David Lovell, Operations Director

Partner Insight: Investment in the VCT sector has traditionally lagged in terms of the technology and infrastructure available for investors. This is finally changing, says David Lovell, operations director at GrowthInvest

The UK's thrusting technology and IT sector is well-regarded across the globe, and the Autumn Budget has confirmed and enhanced the government's support to growth businesses and investors through the EIS and VCT markets. The investment infrastructure for this sector is now also changing and there are several factors behind the emergence of tax efficient investment platforms.

The current position for tax efficient investments has many parallels with the initial adoption and use of adviser platforms 15 or 20 years ago which, despite initial resistance from some advisers and fund managers, now sees over 90% of investment and pension flows through financial adviser marketplace. Most of this flows through one of the 15 or so specialist adviser platforms, many with subtle and slightly different market propositions. These trailblazers have ensured there is a clear and well-understood set of benefits for advisers and their clients to use platforms: including transparency, flexibility and investment choice. They also allow the adviser to lessen the administration and focus on their job. The client gets a cost effective and clear view of their portfolio. Nearly exactly the same service is now available in the tax efficient market.

The Patient Capital Review and the subsequent Autumn Budget have absolutely focused on growth investment. The tightening of the rules around qualifying companies, inevitably means there is a general move up the risk scale. While government shares in this risk through tax advantages, the only real way to manage risk is to ensure that there is proper diversification across a client's portfolio. This should mean diversification across product providers, sectors, as well as the underlying investments. The best and easiest way to do this, while clearly demonstrating that a wide range of investment options have been considered, is on a platform.

There is a growing acceptance among product providers that allowing their clients to use the available technology to make investments in a manner in which they chose is perfectly reasonable.

Click here to read more about how GrowthInvest is helping to evolve tax efficient investing for advisers in this month's Spotlight on Tax Efficient Investing 

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