Advisers think their clients do not want to invest in start-up companies, despite almost half saying they are interested in the asset class, a study has found.
A study by Octopus Investments found that just 17 per cent of advisers think their clients are interested in the asset class.
However, 45 per cent of investors actually are keen to explore early stage companies.
The firm surveyed around 1,000 UK adults with investments partly or fully managed by an adviser along with 200 financial advisers.
It uncovered another “perception gap” with 36 per cent of advisers saying their client base had become more risk averse, compared with 53 per cent of investors saying they would be willing to take on more risk to achieve more growth.
There was also a disconnect between what advisers thought their clients’ most important investment priorities were, compared with what investors themselves said.
Advisers thought their clients prioritised ISA and pension planning, diversification, and low volatility, before high growth.
Yet investors themselves put high growth above ISA and pension planning when asked to rank their three most important investment priorities.
The gap was also seen in what advisers say they recommend to clients when it comes to tax-efficient products, specifically those that invest in early-stage UK companies.
While more than 90 per cent advise on pensions and ISAs, only 36 per cent advise on venture capital trusts (VCTs) and only 27 per cent advise on Enterprise Investment Schemes (EIS).
In spite of these figures, when advisers were asked about expected client scenarios in the next 12 months, clients targeting tax-efficient income (51 per cent) was the second most popular response, in line with the number of investors who said they would like more tax planning advice.
Jess Franks, head of investment products, said: “With a backdrop of high inflation, frozen tax thresholds and reasonable returns on cash, many investors will be looking to their adviser to suggest investments with higher growth potential. EIS and VCTs can be an interesting regular investment consideration, targeting higher levels of return in addition to the benefit of tax relief.
“It is clear from our survey data that clients place significant value on being able to add early-stage companies to their portfolio where appropriate. Both EIS and VCT are high risk investments targeting increased levels of return, but with quite different characteristics, meaning that there is a key role for advisers to play in ensuring clients are selecting the right products for the outcomes they are looking to achieve.”
tara.o'connor@ft.com
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