International bonds are growing in popularity among advisers, new research from Canada Life has revealed.
The research, conducted in partnership with the lang cat, found that among firms already using international bonds 71% say they expect to be using them more in five years’ time than currently.
Out of the firms recommending international bonds to their clients, two-thirds (66%) report doing so more often than they were five years ago. A third (33%) believe it is about the same and just 1% say they are recommending the product less.
Additionally, 69% of advisers expect an increase in the volume of trusts used alongside an international bond in the next five years.
Amongst advisers that do not currently recommend international bonds, the general consensus is that this will change in the coming years, with more than three quarters (77%) expecting to be doing so.
When asking why advisers choose international bonds for clients over alternatives, the leading reason was inheritance tax planning (80%), followed by ‘gifting in the most efficient way’ (54%).
Meanwhile, when asked about the factors that determine which international bond provider they choose to use, servicing (69%) was cited as the top reason. The ‘reputation of the provider’ came in second place (63%), followed by the ‘range of estate planning/trust options (61%).
Sean Christian, Managing Director, Wealth Division at Canada Life International, said: “The international bond market is gaining real momentum as advisers look to solutions that can flex with changing client needs.
“International bonds are a regulated and widely recognised solution that comprise a wide range of investments and valuable estate planning opportunities. A shifting tax landscape, with changes to capital gains tax allowances and inheritance tax, means advisers are seeing clear demand for this type of solution.
“With further tax changes speculated at the upcoming Autumn Budget, products like international bonds are likely to come into sharper focus as advisers look to solutions that enable clients to pass on wealth efficiently to their loved ones.”
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