How to start recommending specialist tax-efficient investments

24 August 2021

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If you’re new to specialist tax-efficient investments like BPR, VCTs and EIS, there are some practical steps you can take before writing your first case.

Many advisers are finding clients need additional ways to invest tax efficiently. It might be a client hits the pension lifetime allowance or is using their full ISA allowance. Or it might be that a client wants to plan for inheritance tax, but is concerned about losing control of assets in their lifetime.

If you’re an adviser with clients who could benefit – and it’s likely you are – but haven’t explored Business Property Relief (BPR), Venture Capital Trusts (VCTs) or Enterprise Investment Schemes (EIS), then now is an ideal time to get up to speed. That’s because key tax allowances are now frozen until at least 2026, so clients may benefit from more options to invest tax efficiently.

The legislation behind these types of investments has been backed by successive governments and offers a variety of tax reliefs (subject to qualifying criteria), designed to encourage investors to support young, growing companies by offering some compensation for the higher investment risks involved.

As part of a carefully planned portfolio, these investments can be extremely useful in planning for a range of clients and discussing them will add value to client reviews. They can also help grow your business, by increasing your assets under management through existing clients, word of mouth referrals and future generations too.

If you’ve not explored these investments, how do you go about it? It might seem daunting, but it’s not as complex as you might think and is similar to writing any other investment business.

Overcoming the ‘fear factor’

Fear of the unknown is a human instinct, so it is understandable many advisers steer away from these investments if they lack knowledge. But it’s a mistake not to learn about them, so you can advise on them if needed.

Mark Greenwood, Director of Compliance Services at The SimplyBiz Group, joined the Octopus Estate Planning Show recently.

He explained: “I would think in most advisers’ client banks there will be clients where tax-efficient investments are quite likely to be appropriate. These aren’t for every client, but advisers should be looking at tax-efficient investments, even if it’s to count them out.”

“Knowledge is everything,” says Mark. “Once advisers get to understand the investments, the fear dissolves.

“Not having the knowledge is not an excuse. It’s far better to have the knowledge, look at it, and decide that actually for this client it’s not the way to go.”

Goal-based risk approach

One of the most common concerns Mark Greenwood hears from advisers is about how to approach risk and suitability.

This is where advisers and clients should understand that it can be okay to have different pots of money at different risk ratings, notwithstanding their overarching attitude to risk.

“A client can have different tranches of money at different ‘speeds’ from a risk perspective and the client file needs to clearly articulate that,” says Mark.

“If a client is a 6/10 for risk overall and you have a solution that’s 9/10, it needs to be clear that for this particular pot of money, for these reasons, a client is going to be taking more risk than the rest of their portfolio.”

It’s just as important to document that the client has made an informed judgement and is comfortable with the level of risk they are taking with that particular portion of their assets.

Mark says: “It’s not always clear that the client has an understanding of the risks. There’s a bit of an obsession around the tax benefits – which are fantastic – but our file review team would be looking to see that the adviser has addressed attitude to risk, capacity for loss and how that impacts the recommendation within the case.”

Writing your first case

One adviser who recently wrote his first BPR case is Mark Wheeler from True Potential Wealth Management.

Wheeler gained knowledge through a range of resources from Octopus and he explained: “The brochures, illustrations, quotations, it’s all very simple and streamlined. I also went into the archive to see old webinars, joined live webinars and spoke to my local representative. I felt very confident by the end that I knew what I was offering.

“When you present it to the client – all the literature, the information from providers like Octopus is clean and simple to understand, telling the client and their family exactly what they need to know.”

After writing his first case, Wheeler quickly gained confidence to advise similar investments to other clients. He is now re-visiting clients who’ve been concerned about locking their money away. He is also working with his accountant with regards to tax-efficient investments, to bring more business in from that direction too.

Kickstart your tax-efficient knowledge.

Octopus can help you boost your knowledge of tax-efficient investments. Sign up to our online show in September, covering key annual and one-off client planning opportunities that these types of investments can unlock. As well as logging CPD, you’ll leave armed with the knowledge needed to add more value for your clients. Visit

These investments are not suitable for everyone. Any recommendation should be based on a holistic review of your client’s financial situation, objectives and needs. Issued by Octopus Investments Limited, which is authorised and regulated by the Financial Conduct Authority. Registered office: 33 Holborn, London, EC1N 2HT. Registered in England and Wales No. 03942880. Issued: August 2021. CAM011245


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