Increased data on VCTs, EIS, SEIS and BR can help advice firms actively diversify and personalise client tax advantaged portfolios, Alan Sheehan and Guy Tolhurst, directors at MICAP tell Rob Kingsbury.
The MICAP platform is whole of market across the range of tax advantaged products – VCTS, EIS, SEIS and BR products. It provides 75 factual data points on each product so users can filter the market into a manageable shortlist of offers, and then dig down deeper for due diligence on that shortlist of products to meet the individual client’s needs.
“Pick any particular funds and you can compare them side-by-side across 75 different data points,” Tolhurst says. “This is a huge time cost saver bringing lots of operational efficiencies and encouraging diversification. It allows a read across multiple products very quickly.”
“What we set out to achieve was to enable paraplanners and advisers to make recommendations which are tailored to the individual client,” says Sheehan. “We looked at the typical industry scoring, and found it was single figure and very opaque. What did was to score each fund across seven different aspects – diversification, financial security, exit strategy, liquidity, regulatory, HMRC ( as tax benefits are not guaranteed), and fund manager. For fund manager, for example, we have 22 individual data points, looking at areas such as operations, experience and assets.”
“When paraplanners are researching a number of products, they may have to wade through a number of products reviews, which can be 20 pages and more long,” says Tolhurst. “That can take a huge amount of time. Our scoring mirrors the review, to help signpost the reader to the sections of the review to which they should be paying attention.
“Many firms have boiler plates they use for products like EIS and VCTs, especially if they don’t do a lot of this type of business, because of the weight of the work involved. What our service encourages and helps paraplanners with, is to personalise their suitability reports. Paraplanners can dive into the section of the review which is most relevant to the client, pull out the information, and use it to populate the suitability report in a way that is personalised to that client’s needs.”
“We’re about taking the heavy lifting out of the research and due diligence for paraplanners who are tasked with finding the right tax advantaged products for individual clients.
“We also do this for application, investment and portfolio management,” Tolhurst says. This includes several add-ons to the service, which MICAP has developed in recent years.
Portfolio builder, which enables offers researched to be added to a portfolio. Tolhurst says: “This enables different tax advantage products to be placed alongside one another, on a portfolio timeline, showing what the investor experience might be over the investment period, as well as sector allocation (which can identify concentration risk if any), and portfolio fees. Paraplanners can then play around with the amount invested and concentrations. You get a blend of the impact scores of all those investments, so you can see how adding in particular investments alongside others can potentially reduce the risk in certain areas, for example, liquidity, financial security, manager operations and experience. It gives paraplanners and advisers the tools to make these adjustments which can then be presented to the client, so they can see what the different investor portfolio could mean for their investor experience.”
The platform also creates an automatic audit trail which tracks the research process and how the client recommendation was achieved. This can be identified as generic research and client specific research. “This is so important for long term and illiquid nature of these investments, as it allows firms to evidence how they arrived at their recommendation.”
More recently MICAP introduced panel support, which can help advice firms to define and screen for products that suit their client base and Crete a central panel of products. The service then monitors the market to ensure the panel is based on the latest open offers and up-to-date data.
Reacting to the tax advantaged industry “lagging the main stream” when it comes to accessing performance data post investment, “which can make things very messy and time consuming for paraplanners trying to obtain data on even a few products,” Tolhurst says MICAP developed a client reporting tool which pulls in the data for the individual client’s investments. “This supports paraplanners in particular in producing regular reporting on an ongoing basis.”
The platform also recently announced the launch of its investment facilitation service*, a single sign-on solution, free to advice firms, where paraplanners can complete and fully track online applications.
“What we’re delivering for advice firms is a consistent investment experience, which gives paraplanners everything they need when researching and recommending tax advantaged products, fully evidenced for compliance purposes.”
* https://professionalparaplanner.co.uk/free-to-advisers-eis-seis-platform-launched/
[Main image: nordwood-themes-EZSm8xRjnX0-unsplash]
