Investment risk tops adviser EIS concerns

Investment risk tops adviser EIS concerns

Investment risk has topped a list of adviser concerns about enterprise and seed investment schemes, with almost one in eight citing it as the reason they shun the alternative investments.

The concern was revealed in an adviser survey by Intelligent Partnership of 297 advisers in the final quarter of last year, carried out in conjunction with the Enterprise Investment Scheme Association planning committee.

Investment risk was followed by a lack of liquidity or fears there would not be sufficient deal flow at 58 per cent.

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Of those advisers the survey canvassed, 25 per cent said they did not recommend either EIS or SEIS, a finding consistent with last year’s survey by Intelligent Partnership.

Tax benefits remain the main reason advisers recommend the alternative investments - which can attract up to 40 tax relief - with three quarters of the advisers polled indicating IHT mitigation was one of their top three reasons for recommending EIS.

A total of 57 per cent cited portfolio diversification, compared with 61 per cent the year before.

In terms of what the most important criteria when choosing an EIS or SEIS investment, 56 per cent of advisers selected the manager’s performance track record as the most important criterion.

Speaking about investment risk as the top concern of advisers, Andrew Aldridge, head of marketing at EIS provider Deepbridge said risk versus reward was a constant balancing act for the sector.

“We have very stringent investment criteria so identifying and then investing in companies which meet these criteria can be a challenge.”