ISA business levels set to surge

ISA business levels are to surge upwards thanks to the increased investment opportunity presented by the changes to the ISA allowance, according to the latest findings from the Fidelity FundsNetworkTM Adviser Sentiment Index (‘ASI'). 

Conducted on a quarterly basis, the ASI tracks the experience of UK financial advisers on what business levels have been like in recent months and what they believe will happen in the coming 3 -12 months.   Nearly 600 advisers responded to the first FundsNetwork ASI survey of 2010 and the findings show that advisers are expecting to be very busy come the new tax year.

Encouragingly, the latest results suggest that whilst business levels haven't changed much since November, the likelihood is that levels of business are going to dramatically improve come the end of the tax year. Over three quarters (75.8%) of advisers said that their over 50 client base had already taken advantage of the increased limit and a further 87% said the remainder of their client base (those under 50) would take advantage of the extra £3,000 when it is made available to them after 5th April.

When asked why their over 50 client base hadn't taken advantage of the extra allowance, the majority of advisers (8.6%) said it was because their clients didn't have any extra money to invest at present. The same response was received from advisers when they were asked why their remaining client base wouldn't take advantage of the increased allowance in the next tax year.

80% of advisers also said that they are suggesting that their clients make investments into equity funds, whereas the second asset class, bonds, was only recommended by 11% of advisers, a huge difference between the two.

Peter Hicks, Head of UK Retail Sales at Fidelity FundsNetwork, said: "It is interesting to see that there is already demand from clients to utilise the extra £3,000 allowance when it becomes available in the next tax year. To be able to shelter £10,200 each year from the tax man is a big deal. Over time with accumulation, that money could be used towards education, paying off a mortgage or even retirement.

"Whilst adviser business levels haven't changed over the last 3 months, this isn't unexpected. Christmas and New Year is a busy time of year for everyone, but what is encouraging is that advisers are certain that business is going to pick up over the next 3, 6 and 12 months where we would hope levels of business remain normal or above."

The survey, conducted at the end of January this year, took into account responses from nearly 600 advisers across the UK, with the highest response rate coming from general practice advisers and those mainly from the South East.