Guy Myles, co-founder and managing director of investment house Octopus, said it was “evident” that pension restrictions had led advisers to loook for alternative investment solutions for their clients’ planning requirements.
He said he expected the trend of advisers using EIS or VCT to continue, although he said that, outside of the advised community, many investors were still unaware of the tax and investment advantages of smaller companies.
He added: “It is disappointing to learn that the broader investor landscape is not reflecting the apparent confidence surrounding this rising asset class.
“There is a strong requirement for us to help raise awarenss among invetors of the benefits of smaller company investing.”
Mr Myles said that it was up to the industry to help raise awareness and demonstrate to investors how smaller companies can be used as part of a holistic portfolio manage to deliver “effective financial planning”.
His comments followed research by Octopus among entrepreneurs, financial advisers, private and professional investors.
This revealed that 81 per cent of people felt more confident about the UK economy than a year ago and 63 per cent were positive about smaller companies and their positive effect on the UK’s GDP.
Yet despite this awareness - and a further 0.8 per cent rise in GDP as reported by the Office for National Statistics - people still seem reluctant to get into smaller company investing, whether through a VCT, EIS or within an AIM portfolio.
The survey revealed that only 26 per cent of the advisers polled had seen their clients show increasing interest in smaller company investing over the past year, while only 39 per cent of advisers themselves would recommend a VCT or EIS to those clients who will be caught out by the annual pension cap.
