Market and process update - Investments
Last month was marked not only by welcome warmer weather, but the completion of our annual investment process review. This extensive review focused on investments both in respect of any product and regulatory developments.
Regulatory developments
The main discussion points over the last 12 months relate to possible changes to ISA allowances and the anticipated business relief and longer term impact of changes to the inheritance tax allowances.
The government wants more people to invest, particularly in Britain and British companies, but it has one eye on not overcomplicating the ISA rules. The chancellor’s October budget cancelled the previous governments British ISA plans following concerns surrounding its complexity. There were also questions around the intended impact of investment, and whether UK listed equities would allow some multi-national organizations to qualify. There is now discussion around whether private markets could play a role.
Inheritance Tax (IHT) investment changes focused on reduced allowances for business relief schemes. There was also a consideration of whether investment bonds will become more popular following pensions now subject to IHT on death.
From 6 April 2027 defined contribution pensions will no longer fall outside of a person’s estate for IHT purposes, this makes them liable to a possible 40% tax rate like other assets and personal allowances may have to be considered sooner, as part of the planning decisions in retirement.
What has been seen by the threesixty research team is an increase in enquires for non-AIM (unquoted) IHT solutions. This maybe because from 6 April 2026 100% relief is exempt on the first £1,000,000 of assets (including unquoted shares) with a 50% relief applying above this amount. Any amount of AIM shares held on death will only be eligible for 50% relief, giving an effective IHT rate of 20%.
For research and due diligence on business relief scheme providers, visit DD|hub for more information.
Investment product changes
Continuing the theme of IHT solutions, the trust based packaged IHT planning space has a new entrant to the research, RL 360 Offshore Bond on the Nucleus Wrap Platform, which now meets the criteria for inclusion – more products seem to have dedicated trust support services helping advisers identifying support for trustees.
We note in the investment product space the withdrawal of the AVIVA Select Investment Growth Unit linked Bond and the launch of the AVIVA Onshore Bond (available as part of the AVIVA platform). The new bond has a few significant differences to its predecessor:
- Maximum age at entry increased to 89 years from 84 years old
- Increase in number of segments available from 250 to 1000
- Increase in number of funds available from 108 to 6000
- Allowing Model Portfolios within the bond
These changes follow the trends we have seen over recent years to give clients more segments, fund and discretionary options to increase investment flexibility.
In respect of changes to our research, we’ve removed Life Assurance ISAs - ISAs where the primary purpose is to access insured funds. With wider access to popular With-profit/Smoothed funds to mainstream investment ISAs and platforms has made this research largely redundant.
Pension and protection data update
Though the focus of the review was investment products, we also produced a data update for our Pension and Protection Research to keep it up to date and to capture any inter-review changes.
Pension changes
We noted that the Scottish Widows Group Stakeholder plan is no longer open to new business and the M&G Wealth Pension account no longer meets our minimum criteria for inclusion.
In respect of additions, we added the new Fidelity Adviser solution with a Standard Life Guaranteed Lifetime Income Plan to our Products Providing Income Guarantees Research as a hybrid product. This product offers a guaranteed income alongside a platform drawdown solution with flexible investment options for the remainder of pension assets.
Protection changes
Due to changes AKG approach to assessing non-profit firms, we’ve temporarily withdrawn Friendly Societies from the research. Generali products have also been removed from our Group Income Protection and Group Life research as Generali no longer holds a provider AKG rating. We’ve also updated product data, which has identified some providers moving more in-line with standard terms for Life & Critical Illness and Income protection; reducing the scope for minimum age below 18, income protection above 65% and fracture cover benefits. We’ve also updated our annual review of claims and application stats, giving advisers an indication of flexibility of provider acceptances within the policies underwritten over the last 5 years.
Next review
The next product review by the threesixty research team is scheduled for September, with a focus on a detailed process and market review of Pensions.
This revised content aims to deliver a professional and cohesive overview of the product updates and market insights, while emphasizing the importance of staying informed on regulatory changes and product innovations.
