View more on these topics

Tracey Dyeer

With interest rates and inflation at their lowest levels for years and low-margin stakeholder pensions on the horizon, investors and IFAs are looking for alternative vehicles for savings and investments other than the traditional bank and building society deposit accounts. I believe offshore products should be among them.

We are all aware of the potential impact of stakeholder and stakeholder-type products on the profitability of an IFA&#39s business. The 1 per cent maximum charge will squeeze margins and have a knock-on effect on their income streams. So there is a real need for IFAs to look elsewhere for new business opportunities.

Diversification does not have to be as scary as it first sounds. All IFAs need to do is look for an untapped market which will continue to grow. Simple. There is such an opportunity – the offshore market.

The offshore market has enjoyed stunning growth over the last 10 years. According to AILO, the market grew by 98.5 per cent between 1995/97.

It is predicted that this growth will accelerate based on two key drivers – market buoyancy and the improving reputation of the offshore market.

The most recent Private Wealth Survey by Merrill Lynch/Gemini indicated that there are over four million wealthy investors – approximately 4 per cent of the adult population.

This number is expected to treble in the next six years. According to the survey, the wealthier the client, the more likely they are to invest offshore. Clients with more than £500,000 tend to invest up to 50 per cent of their assets offshore.

There lies your second opportunity – the emerging affluent with between £50,000 and £100,000 who tend to invest 5 per cent of their wealth offshore. This creates a chance for IFAs to advise this group that offshore investment is not just for the super-rich and could be the right choice for them.

The key advantage of the offshore market is the flexibility of the tax environment. The scope for corporate and trustee investors, in particular, to choose when and, to some extent, how much tax to pay will stimulate the use of offshore vehicles.

Potential clients are now much more likely to be aware of offshore investment and its benefits. The offshore market is gaining in respectability and it is anticipated that fears and suspicions will decline and it will become one of the mainstream markets.

Offshore investment can be particularly useful for corporate and trustee investors but there is no denying it can be complex. This can work to an IFA&#39s advantage. Although high-net-worth clients are more financially aware than the average client, they are still looking for advice and support. This can range from providing information to offering a whole wealth management service. In either case, IFAs can fulfil an important and valuable role.

Wealth management has traditionally been the reserve of private banks and boutique investment firms but high-net-worth clients are becoming increasingly interested in the opportunities presented elsewhere.

As a result, a large number of reputable providers are supplying support packages and are constantly developing more attractive offshore products and services including a range of financial solutions for tax planning and corporate investment.

Clearly, there is an opportunity here. Respectability has improved, old perceptions have all but disappeared and demand is predicted to continue to grow. It is an excellent time to diversify into the offshore market.

Tracey Dyer is senior sales development executive at Clerical Medical


Manx cats will get the cream

“Please would you tell me,” said Alice a little timidly, “why your cat grins like that?” “It&#39s a Cheshire cat,” said the Duchess, “and that&#39s why.” (Alice&#39s Adventures in Wonderland, 1865). If you are among the one in five UK IFAs who sells offshore products to your clients, you will be smiling like Lewis Carroll&#39s […]

Offshore security

Neville James has introduced the secure capital growth fund, an offshore Oeic that invests in traded endowment policies (Teps) and zero-dividend preference shares. Looking at how the fund fits into the market, Ball is enthusiastic. He says: “It is excellent for the risk-averse investor looking for capital growth with minimal downside risk.” Bulgin says: “This […]

Fourth issue of ScotLife bonus bond

Scottish Life International is issuing a fourth series of its income & growth bonus bond. The three-year bond offers investors the choice of either regular income of 11.2 per cent a year or 2.7 per cent a quarter. Alternatively, investors looking for capital growth will get 35.6 per cent growth on the bond&#39s maturity, provided […]

&#39Transfer rules another nail in Equitable coffin&#39

The Inland Revenue has released final regulations on personal pension transfers, including changes which allow the transfer of income-drawdown policies for the first time. The new rules will come into force on February 14, prompting some IFAs to predict the new drawdown transfer option will encourage a flood of drawdown policyholders deserting Equitable Life for […]


Employer iPMI responsibilities could continue to escalate, says Jelf

New laws in Dubai will put the burden of providing international private medical insurance (iPMI) firmly on the shoulders of the employer in order to maintain the country’s leading healthcare facilities. With 10,000 UK nationals having moved to the country since 2007 and only 16.5 per cent of the total 8.2 million people living there being Emiratis, Jelf Employee Benefits believes this move was inevitable and employer responsibilities could continue to escalate in future.


News and expert analysis straight to your inbox

Sign up


    Leave a comment


    Why register with Money Marketing ?

    Providing trusted insight for professional advisers.  Since 1985 Money Marketing has helped promote and analyse the financial adviser community in the UK and continues to be the trusted industry brand for independent insight and advice.

    News & analysis delivered directly to your inbox
    Register today to receive our range of news alerts including daily and weekly briefings

    Money Marketing Events
    Be the first to hear about our industry leading conferences, awards, roundtables and more.

    Research and insight
    Take part in and see the results of Money Marketing's flagship investigations into industry trends.

    Have your say
    Only registered users can post comments. As the voice of the adviser community, our content generates robust debate. Sign up today and make your voice heard.

    Register now

    Having problems?

    Contact us on +44 (0)20 7292 3712

    Lines are open Monday to Friday 9:00am -5.00pm