Intelligent Partnership (IP), the UK’s leading provider of education and insights on alternative investments, has launched the first industry report on Business Property Relief (BPR) for financial advisers and wealth managers.
The 74-page report, which is accredited for four hours of structured CPD, provides insight into the risks and rewards of BPR solutions and charts market growth. The first product utilising BPR was launched in 1995 and the number of products available has grown 90% in the last decade, according to IP’s Report.
Daniel Kiernan, Research Director at Intelligent Partnership, commented: ‘There were fourteen new BPR product launches in 2013, followed by ten in 2014; currently there are 37 products open for investment. IP believes that we are witnessing this growth as the market responds to the financial planning needs of wealthy baby boomers who make up the backbone of the majority of advisers’ client banks.’
The report also includes a survey of 167 advisers active in alternative investments which found that, of the 94% who recommend BPR products, the majority do so because of the speed of IHT mitigation compared to other solutions.
Daniel Kiernan said: ‘There is a growing need for more flexible estate planning solutions that provide IHT relief without forcing investors to make irreversible financial planning decisions. Longer life expectancy means that people cannot gift money away that they may need for future living expenses – particularly care expenses. Products that utilise BPR are the only ones that provide IHT mitigation and allow ongoing access to the funds.’
Despite the possibility of a rise in the IHT threshold, 90% of those surveyed were undeterred from recommending BPR products. However, 58% of advisers cited liquidity as one of their top five concerns when recommending BPR, followed by investment risk (55%), lack of transparency (46%), and high costs (34%).
Commenting on adviser concerns, Daniel Kiernan said: ‘Liquidity, investment risks, suitability and the ultimate exit strategy are all factors that are making advisers hesitate to recommend BPR products – perhaps indications of where the industry can do more to communicate their message and assuage these fears. With 95% of advisers expecting to do more BPR business in the next five years, the knowledge and insight from our BPR Report will increase their confidence and expertise.’