The Innovative Finance ISA (IFISA) has so far been a bit of a tough egg to crack with advisers.
I can already sense the scepticism some of you will be feeling as you scan this article.
And given past problems with new kids on the investment block, no one would blame advisers if they approach this product with a fair degree of caution: the Ifisa wrapper is only three years old, even if the loans and bonds you can hold in it have been around much longer.
But the latest figures from the CCAF 5th UK Alternative Finance Industry report show that people are ploughing around £5bn a year into peer-to-peer (P2P) and crowd lending platforms.
This growing popularity could well mean that clients start asking their advisers about this area of the market. And, with the spotlight on client suitability making it more important than ever to assess a wide variety of investment options for clients, Ifisa-eligible loans and bonds should at least be on the table.
It is not always straightforward for advisers to know if and where these newer types of investment fit into the picture with their clients.
To help, here are three situations where the Ifisa may be relevant for a client.
Pension savers restricted by annual and/or lifetime limits
Cuts to pension allowances have left many of the mass affluent population looking for alternative, tax-efficient, wealth accumulation routes.
With the potential to earn returns of 4 per cent to 8 per cent per annum tax-free, according to 'An adviser's guide to the Innovative Finance Isa' by Intelligent Partnership, the Ifisa definitely warrants some attention here.
Any client investing through an Ifisa must be able to commit to tying up money for the term of the loan or bond, although this is likely to be less of a concern for pension savers who are not in the later stages of accumulation.
In the post-financial crisis era, many clients are increasingly concerned – and want a say – in where and how their money is being invested.
Transparency, choice and engagement are key when it comes to selecting investments for this type of client.
Alternative finance can provide the opportunity to invest in projects or companies they believe can make a positive impact in the world.
Diversifying away from volatile markets
Amid the current stormy markets, chances are you may be planning to create some important diversification for clients who have a significant portfolio of stocks and shares held in an Isa wrapper and/or a self-invested personal pension.
Selling some shares in order to transfer cash into an Ifisa wrapper would avoid capital gains tax (CGT) and allow lending to companies and projects that are not directly correlated to the volatility of stock markets.