Most platform and offshore bond industry executives said they tended to accept Skandia’s explanation that the problem had to do with an unloved product, rather than a question of offshore bonds generally not belonging on a platform.
Skandia revealed earlier this week that it was not accepting new clients to its Old Mutual International Guernsey (OMIG) bond because of lack of demand. According to a company spokeswoman, the bond accounted for less than 1% of the platform’s total funds under management, and an even smaller percentage of new business.
Although offshore bonds offered by two of Skandia UK’s sister investment product providers – Royal Skandia and Skandia Ireland – are extremely popular with UK advisers and their UK clients, for now there are “no immediate plans” to add them to the Skandia platform, the spokeswoman added.
"But we continue to monitor demand and align our business according to the feedback we get.”
Skandia International marketing manager Phil Oxenham said market reports that investors in the OMIG bond were unable to claim back tax – making it potentially less attractive than rival offerings on the market – were untrue, adding that it had simply been crowded out of the market by the popularity of other, newer bonds, including Royal Skandia’s.
Skandia, he added, believed that there was "still a very strong market for offshore bonds on platforms" generally, if not for the OMIG bond in particular.
‘Basic to open architecture’
Peter Wyatt, who is in charge of Seven Investment Management’s platform, on which six life company offshore bonds sit – including a Royal Skandia offshore bond not currently on Skandia’s platform – echoed other platform executives in noting that offering a choice of offshore bonds to clients was seen as basic in an open-architecture platform strategy.
“It’s driven by demand,” Wyatt said. “Where there’s a need for offshore bonds, we can provide that need.
“Offshore bonds provide a tax planning mechanism for certain clients, particularly in the high net work market, which is our target market.”
In addition to the Royal Skandia bond, 7IM’s platform hosts offshore bonds by Axa, Canada Life International (CLI), Friends Provident International (FPI), Legal & General International and Scottish Equitable International.
The story is much the same at Ascentric, the Bath-based UK platform provider, where Dominic Ventham, head of marketing said the company currently had offshore bonds from four providers on offer: CLI, Axa, FPI, and Isle of Man Assurance.
“We are looking to add to this number to meet growing demand, and provide more choice to the advisers that us and their clients,” Ventham added.
Royal London 360, the international arm of the Royal London Group, has its offshore bond on “several” platforms at the moment – Nucleus, Novia and Sanlam – and is preparing to announce three more in the next few weeks, according to RL360 chief executive David Kneeshaw.
“Clearly I have no knowledge of Skandia’s thought processes [with respect to its decision], but to me, this seems a short-term rather than long-term decision, given that I believe that platforms, and offshore bonds within platforms, will continue to grow,” Kneeshaw added.
International platforms also ‘bonding’
At Praemium, the Australian platform provider with a UK operation, managing director John Martin said offshore bonds were seen as "integral" to the company’s roll-out of its offshore platform, unveiled a few months ago and reported here.
Praemium currently offers access to the products of eight offshore bond providers in the UK, and has recently completed "global agreements" with four of these, "to ensure immediate access both onshore and offshore, regardless of who is managing the assets", Martin said.
Like 7IM’s Wyatt and Ascentric’s Ventham, Martin stressed the need to ensure a range of offshore bond providers to accommodate what he said was "significant demand for choice" among advisers and their clients.
