FTAdviser.com

Advertising

Cash bonds are an "easy option" for IFAs to recommend to clients in the current difficult markets but no match for "a diversified portfolio", an adviser has warned.

Julie Lord, financial planner for the Think Group, made her comments after Cardiff Pinnacle Investments claimed cash-based life bonds are an increasingly attractive prospect for their security.

The BNP Paribas offshoot called the products "a safer investment option than bank or building society deposits in the current uncertain economic climate".

However, Ms Lord said her company rarely recommended them, preferring to prepare clients for the risk of more high yield propositions.

She said: "They are obviously attractive from a security point of view, but whether I would recommend them I am not so sure.

"We do not tend to recommend bonds anyway, unless there is a compelling reason, such as we are looking to set up a trust fund. Just bunging money into bonds for safety seems like an easy option for advisers to recommend.

"We would set up a portfolio with the clients' money spread about, setting up a genuinely diversified portfolio and educating clients that their investments will go up and down and cash is not the safe option, people once thought it was."

Kathy Byrne, head of group investment business for Cardif Pinnacle, said:"In the current economic climate, it is clear that investors have increased concerns regarding the security and liquidity of their cash investments."