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What advisers are saying: Planning around offshore strategies

Phil Wickenden Technical Area 200

For most advisers, offshore solutions represents in the region of 1-5 per cent of all investment business with an overwhelming bias to bonds and very little consideration given to QNUPS / QROPS in the main. Most advisers do not expect this to change in the next year.

Just as Monsieur Wenger points outwardly to financial doping, international breaks and the curse of fatigue as the cause of some of Arsenal’s missed opportunities, so too advisers were most likely to identify external factors as the biggest threats to greater engagement with offshore business.

But sometimes the truth is closer to home.

The regulatory environment and anti-abuse legislation in particular were the key threats identified by advisers (39% and 21% respectively), although negative public perception was also discussed as a potential brake. Advisers have experienced a marked coagulation of the process involved in offshore product selection and justification (owing to various solutions coming under greater scrutiny). At a time when most are acutely aware of the cost of delivering advice (and of the costly repercussions of getting it wrong in the regulator’s eyes) advising on offshore alternatives is seen as increasingly onerous and risky business. As such advisers are apprehensive at best.

And these are undoubtedly very real issues to contend with. But while advisers point to outside forces holding back engagement, our research strongly indicates that there is a significant lack of (the deep kind of) understanding required around the whole offshore market and QNUPS / QROPS in particular. This implicit reality is likely to be just as big as the external factors explicitly referred to.

More positively greater opportunities around (and appetite for) tax planning in the UK are widely expected to offer a potential fillip for offshore business. However, there is recognition that consumer scepticism, fanned by scary noises from various media outlets places a real onus on the adviser to articulate benefits and risks to a degree that is not presently matched with the level of understanding required. It is certainly hoped that the ‘buzz’ around tax (both positive and negative) will, on balance, generate a greater pull and, with it, increase adviser inclination to get over the education hump.

More advisers recognise that their raison d’etre is no-longer investment performance per se and real value (and differentiation) will be gained from cash flow modelling and tax planning which should necessarily include consideration of a broader set of offshore solutions than is presently put on the table by most.

Phil Wickenden is managing director of So Here’s The Plan


All quotes have been taken from interviews with qualified financial advisers


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