Advisers struggling to explain VCTs and EIS in ‘a simple way’
- On January 24, 2024
- By GrowthInvest Marketing
There are advisers who have never engaged with the venture capital trust (VCT) and the enterprise investment scheme (EIS) markets, Puma Capital has suggested.
The group’s founder and chief executive David Kaye told Money Marketing some advisers are reluctant to explain what they are due to the “complexity” behind them.
“It is capable of being explained in a simple way,” he said. “Once you get your head around the tax reliefs, then it is easier to follow.”
VCTs are now a “big part” of the wealth management market, he added.
The investment manager runs webinars for financial advisers that provide background information on VCTs and offer perspectives from paraplanners who are active in the market.
Kaye said adviser engagement with these webinars is increasing.
He said it is “important” to have a financial adviser in the middle when investors are choosing between a VCT or EIS to see what option suits them best.
VCTs are investment vehicles that were set up to promote investment in small UK businesses that meet certain criteria.
To encourage support for these businesses, the government offers generous tax benefits.
Kaye said an EIS is often described as a fund, but it is better to think of it as a portfolio. Additionally, an EIS offers 30% income tax relief.
From a risk perspective, Kaye said advisers should be comfortable recommending VCTs to clients as they are all audited by large firms and are subject to regulation.
He said: “The magic is matching the product with the client’s needs.”
Puma has also opened a £15m fundraising for Puma Alpha VCT, which it said offers an opportunity for investors to gain exposure to a diversified portfolio of scale-up, high-potential businesses with the aim of providing “attractive but stable returns”.
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