Just one in eight financial advisers would invest their own money in new Innovative Finance ISAs due to launch in April, new research* from MetLife shows.
Its study among retirement specialists found just 12% say they would put their own cash into the new class of ISAs which will allow peer-to-peer (P2P) loans to be included tax-free in ISAs from the start of the new tax year.
A major concern of advisers is that the launch of Innovative Finance ISAs (IFISAs) will encourage people to use P2P for retirement saving – nearly one in three (31%) of advisers questioned are worried about IFISAs being used for retirement income.
The P2P** sector has seen phenomenal growth – the market doubled cumulative lending to £4.4 billion in the year to December with more than 128,300 lenders – and analysts believe the launch of IFISAs will provide a further boost.
MetLife’s own research*** among retirement savers shows that nearly one in six (16%) of over-55s said they would consider investing in P2P ISAs when they are launched, attracted by the potentially higher returns.
Simon Massey, Wealth Management Director, MetLife UK said: “The P2P sector is growing strongly and offering attractive returns particularly when interest rates are at an all-time low and likely to remain there which could put pressure on cash ISA savers to find alternative investments.
“However it is striking that financial advisers are not joining the rush to invest in P2P and are generally cautious about investing their own cash in P2P which does carry risks.
“People need to be fully aware of the possible risks and costs involved in Innovative Finance ISAs and weigh up the risks particularly when they are looking for more certainty over retirement income and investments.”
Research among over-55s shows worries about ISA investments are not confined to P2P – 46% of over-55s say they are put off stocks and shares ISAs by the risk of savings losing value in stock market slumps.
MetLife’s Guaranteed ISA offers a choice of capital or income guarantees with unique daily lock-ins and a market-leading guaranteed income deferral rate of 5%. It delivers a unique investment growth lock-in through its innovative Active Asset Allocation so that any increase in the value of a client’s investment above their existing guarantee base is locked-in daily. Active Asset Allocation invests in a combination of the MetLife BlackRock Global Growth Fund and a range of MetLife Fidelity Corporate Bond Funds. Investors can apply online through their adviser.
Guarantee charges start from 0.6% on the Secure Income Option and 0.3% on the Secure Capital Option. MetLife’s Active Asset Allocation has a total expense ratio of 0.55%. The annual management charge for the ISA Portfolio ranges from 0.7% to 0.4% depending on the value of the investment. The initial minimum investment in the Guaranteed ISA is £15,000.