International bonds are growing increasingly in favour among advisers – and this trend is only set to continue over the next five years, new research shows.
A survey of advice professionals in the UK, conducted by Canada Life in partnership with the lang cat, found that for firms already using international bonds, 71% said they expect to be using them more in five years’ time.
Meanwhile, of advisers who said they don’t currently recommend international bonds, most (77%) believed this will change over the next few years.
Two thirds (66%) of advisers who recommend international bonds to clients said they do so more often now than five years ago, while just 1% said they are recommending the product less.
Additionally, 69% of advisers said they expect an increase in the volume of trusts used alongside an international bond in the next five years.
Addressing the reasons why they choose international bonds for clients over alternatives, “inheritance tax planning” was the most popular reason, cited by 80% of advisers, while “gifting in the most efficient way” was selected by 54% of respondents.
Sean Christian, managing director – wealth division, Canada Life UK, said the research shows 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,” he said.
“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.”
