If your clients missed out on the latest issue of the National Savings guaranteed equity bond, which took £100m of new investments, they should count themselves lucky. A new plan from Woolwich Plan Managers offers better terms. Investors who have already used their Isa allowance can still benefit by making use of their capital gains tax allowance.
The National Savings product offered 95 per cent of the rise in the FTSE 100 index over a five-year term or your money back in full. The Woolwich's premium protected growth plan offers 100 per cent of the rise in the FTSE over five years, with no cap on the potential returns, and 100 per cent capital protection if held for the full term.
But the real advantage is in the different level of tax that investors pay on their returns. The National Savings product attracts income tax of 40 per cent, 20 per cent or 0 per cent for non-taxpayers).
The entry of National Savings into the structured product market is a reflection that the spectrum of products is very broad and is the shape of things to come.
Many investors have piled into the National Savings product without taking any financial advice and they have potentially cost themselves thousands of pounds in tax they need not have paid.
One criticism levelled at IFAs is that they do not recommend products which do not pay commission. This is possibly the case in some instances but it is also worth remembering that IFAs are obliged to recommend the most suitable products for a client's needs and, with the punitive tax treatment, on this occasion, the National Savings product falls short of the competition.
Matthew Woodbridge is bond manager at Chelsea Financial Services