IOOF encourages shift to bonds
IOOF is using the shift to complementary wealth accumulation strategies as a result of lower contribution caps to try to drive up the use of investment bonds in the longer term and forestall an exodus of clients from bonds back into super if the contribution cap limit goes back up.
IOOF is trying to encourage the use of bonds for other wealth strategies, according to IOOF senior technical services manager Damian Hearn.
"It's only human nature for clients to go back to the most tax efficient environment and put more money back into superannuation, and that's fundamental to bonds because they come in and out of favour over time," Hearn said.
The contribution cap rules for 2014 haven't been legislated yet.
IOOF is reconnecting with some financial advisers who are using bonds in the low contribution cap environment to encourage them to use bonds for purposes other than an alternative superannuation plan.
They are running technical sessions, face-to-face meetings, and providing information on the web.
Advisers traditionally treat bonds as a savings plan, but they can be used as security for loans, for gearing strategies, or in estate planning, Hearn said.
"A bond does do a lot of other things, so therefore if the contribution caps were to change, if the focus were to change, then it can add some value across a client's life cycle," he said.
A bond itself can work for clients that have multifaceted strategies, Hearn said.
Recommended for you
Tribeca Investment Partners has made a distribution hire from Australian Ethical in a newly-created role focused on the national intermediary market.
Asset managers may be urged to diversify their product ranges, but investment executives have warned any M&A deal should avoid simply filling gaps and instead consider long-term value creation.
Specialist wealth platform provider Mason Stevens has become the latest target of an acquisition as it enters a binding agreement with a leading Sydney-based private equity firm.
Fund managers are entering 2025 with the most bullish sentiment since August 2021 and record high allocations to US equities, thanks to the incoming Trump administration.
