In contrast, just 3% of advisers would be less likely to recommend offshore bonds as a result of the changes.
Almost a third (30%) of advisers say that offshore bonds play an important role in the advice they give to clients; with a similar number (32%) suggesting they are a more useful wealth planning tool than most advisers realise.
Offshore bonds or offshore estate planning wrappers can be used for retirement income once clients have used up their pension annual allowance.
However, despite government cuts to pension tax relief for high earners, only one-in-seven (14%) clients have considered this solution.
The survey suggests that this is mostly due to a lack of knowledge among clients, meaning that advisers have an important role to play in explaining the benefits of using an offshore bond. According to the professional advisers polled, just 16% of their clients are aware they can make regular savings into offshore bonds for their retirement needs.
Cost a key factor
The top factor advisers consider when recommending offshore bonds is the potential tax benefit to their client (70%). This is followed by the cost of the product (56%) and the client’s investment objectives (54%).
More than a quarter (28%) of advisers would base their decision at least in part on the specific offshore jurisdiction of the product. The Isle of Man is most advisers preferred jurisdiction when recommending offshore bonds (57%), followed by Ireland (24%) and Jersey (7%).
The most common reason for recommending an offshore bond is because they are helpful for inheritance tax (IHT) planning (51%). This is closely followed by the deferred taxation benefits that are useful for income tax planning (48%).
Constant tinkering
Sean Christian, managing director at Canada Life International, said: “Ever since the chancellor gave his surprise 2014 budget announcing the pension freedoms, there has been a constant tinkering with the pension rules and we have seen substantial cuts to the limits for contributions. All the changes have a big impact on what advisers are recommending to their clients, and the direction of travel has made offshore bonds far more attractive.
“Offshore bonds are often wrongly thought of as appropriate only for the very wealthy, whereas they are increasingly relevant to a much broader range of clients. Lack of knowledge among clients is now the only thing holding back a much more widespread use of offshore bonds for retirement planning, and advisers have a critical role in educating clients on their benefits.
“This April certainly looks to be a key turning point in what is a pivotal year for advisers planning offshore solutions.”
