London, 25 July 2008: Almost half of all advisers with clients who have Insurance Bonds are considering reviewing their policies with a view to switching them where appropriate into Mutual Funds, according to a recent survey* conducted by Fidelity FundsNetwork™.
The findings, based on responses from over 230 advisers across the UK, revealed that over 40% of advisers are already preparing to review clients with Insurance Bonds, with a view to switching to mutual funds where this is appropriate. A further 26% remain uncertain at this stage whether to review, whereas 33% said they will not review.
Only 1% of advisers said that they believed an Insurance Bond would continue to be the best home for most, if not all their clients, which is telling, since a third of them were prepared to admit that up till now they were largely only using Insurance Bonds for 100% of their clients.
Paul Kennedy, Head of Trusts & Tax Planning Solutions, Fidelity FundsNetwork, comments: “As the research shows, advisers are already considering the benefits of mutual funds as an alternative to Insurance Bonds. It was encouraging to see the survey reveal that 90% of advisers understood that the decision whether to use a life bond or a mutual fund can have a substantial impact on the investor’s ultimate return? Almost, 100% of them recognised the value that this tax planning adds to their investment service and not a single respondent thought tax considerations were irrelevant.”
As we know, recent changes to CGT haven’t fundamentally changed the taxation of bonds and mutual funds but they have acted as a catalyst to re-focus minds on the appropriate use of mutual funds. There remains a place for both wrappers. It is only proper that advisers continually review existing investment and where the case merits,
IMMEDIATE RELEASE
make relevant switches, whether assets or tax wrappers. There are many things that will need to be considered and I’m sure that advisers will only recommend a switch from a bond to a mutual fund where it is in the genuine interest of the client.”
FIL Limited (“FIL”) and its subsidiary companies serve the major markets of the world by providing investment products and services to individuals and institutional investors outside the US. FIL Limited manages a total of £130.4 billion of assets**.
Notes to editors:
* Source: Fidelity/Morningstar UK Retail Prices Index (RPI) April 1999 to 3 March 2008
**Source: Fidelity as at 31.12.07
FundsNetwork, Fidelity’s fund platform, was launched in June 2000. It offers advisers and their clients the ability to invest, manage and monitor their investments in one place, bringing them control, efficiency and new business opportunities. The FundsNetwork service is offered and managed by Financial Administration Services Limited. FundsNetworkTM is a trademark of FIL Limited. The Fidelity ISA is offered and managed by Financial Administration Services Limited. The value of tax savings and eligibility to invest in an ISA will depend on individual circumstances and all tax rules may change in the future. Any opinions expressed are made at the time of writing and can be subject to change without notification. The value of investments and the income from them can go down as well as up and an investor may not get back the original amount invested. Investors should also note that the views expressed may no longer be current and may have already been acted upon by Fidelity. Assets as at 31.12.07 are those of FIL Limited (FIL).
