In the next instalment in our series of exclusive interviews with industry experts, Melissa Griffiths, Head of Sales at GrowthInvest, provides her insight on the biggest growth opportunities and most common risks for investors, and discusses her company’s approach to investing.
1.) What tax-efficient schemes does your company work with, and how do you offer a unique/compelling approach for advisers?
GrowthInvest is an adviser-based platform, offering whole of market access across tax efficient products, from VCTs, EIS and SEIS funds to IHT products including both AIM and asset-backed. The platform allows initial research, seamless digital execution, and then the reporting and management of these investments. A consolidated view of a client’s entire alternative investment portfolio is provided in one place, giving clients, advisers and wealth managers, transparency, efficiency, and control around their alternative advice proposition.
For me, one of the key benefits of our platform which is unique, is the ability to be able to “onboard” client’s existing investments across all tax-efficient products. Once these assets are onboarded, advisers and their clients have access to portfolio reports and analysis across both new investments and legacy onboarded assets, giving reconciled, life-to-date detail of their tax efficient portfolio.
Furthermore, our innovative VCT service has been very popular. Removing the inefficiencies of paper applications, paper share certificates and dividend payments by cheque, the platform allows digital application and direct allotment into our centralised nominee service, with future dividends paid onto a client’s platform account. There is also access to the Secondary market, and our Rolling Programme of VCTs has become an interesting option for many clients as an addition to their pensions.
2.) How active are you in providing education to advisers on the types of clients that are suitable for these types of investments, as well as any changes in regulation or nuances in the existing rules?’
GrowthInvest runs an annual Adviser Hour series, which is a CPD qualifying webinar series, with detailed interviews and panel discussions on the tax efficient market, from key players in the marketplace. The platform has a wealth of on demand videos from the Adviser Hour, plus spotlight interviews from fund managers discussing their own products.
The Market Download which gives a market summary, information on all open offers in the tax efficient space, upcoming events, and market news articles from various sources, to keep Advisers and clients up to date with all changes and news flow in the marketplace.
We are also very excited to be launching a new series of podcasts, ‘Alternative Thinking’. These are designed to deliver market insights and topical discussions on the tax efficient and alternative markets, in a informal environment with industry guests.
Across these three formats we regularly cover relevant topics including changes to the regulatory landscape or taxation rules, such as the recent consumer duty focus.
3.) Where and in which types of companies are you seeing the biggest growth opportunities?
Recent investment flows in the tax efficient space have been concentrated in the VCT market over the past few years, with a record number of VCT fundraises in excess of £1 billion for the past two years. In our opinion, the available secondary market access appears to be a driving force in providing some liquidity options for the clients and therefore a demand for VCT investment, alongside the delivery of some strong dividends, including a large number of special dividends.
Also, the huge intergenerational wealth transfer issue has meant there is a focus on IHT mitigation, and the shorter time period of 2 years offered by the tax efficient products, has continued to be a key factor in the choice for tax-efficient IHT investments.
Focus has moved away from EIS and SEIS funds a little, portfolio level pressures such as the Covid pandemic and market wide pressures on private company valuations have resulted in fewer exits than would have been ideal. However, this year there are signs that the landscape is shifting, with some potential exits to be announced by various managers. Alongside this there are attractive investment opportunities driven by lower company valuations. There will be opportunities to gain exposure to hot sectors such as AI at attractive valuations, alongside an ever-expanding sustainable offering from EIS and SEIS fund managers.
4.) What do you see as the biggest risks for investors?
The biggest risk to investors currently is the unsettled nature of both the wider geo-political environment and the economic climate. This, alongside a higher interest rate environment is slowing down investment flows. We are expecting to see lower VCT fundraise numbers for this season, under the previous £1 billion achievement. Furthermore, IHT concerns with the upcoming elections, are also making many investors play a “sit and wait game” until some reassurance is in place to confirm the political status in the UK.
5.) Should advisers be worried about a lack of diversification, and why?
Diversification is a key concern for advisers in our opinion, and is one of the core benefits the GrowthInvest platform solves. With its whole market offering and ability to also provide some secondary liquidity and cashflow options, it allows both the Adviser and client to have the flexibility to navigate multiple tax-efficient assets.
Furthermore, with the new Consumer Duty requirements for Advisers, the platform provides reconciled, transactional data and consolidated reporting to be able to manage these diversified portfolios efficiently and with transparency.
