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Peer2Peer Finance News | September 18, 2019

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Does the P2P industry need advisers to market the IFISA?

Does the P2P industry need advisers to market the IFISA?
Suzie Neuwirth

PEER-TO-PEER lending professionals are divided on the necessity of attracting independent financial advisers (IFAs) as part of their marketing strategy.

At a recent roundtable event held by Peer2Peer Finance News, supported by Kuflink, industry stakeholders discussed the challenges and opportunities presented by the Innovative Finance ISA (IFISA).

Read more: Cash ISA vs IFISA: how do returns compare?

Mario Lupori, chief investments officer at RateSetter, said that the IFA market is one of a number of channels that the platform is focusing on to promote their tax-free product.

“[Our marketing efforts] will be in targeted spaces and we’re looking to increase distribution such as working with IFAs, or execution-only platforms and discretionary wealth managers,” he said.

“There’s a massive industry of people that are aware of P2P and are increasingly being asked about it.”

Read more: Use it or lose it! Four new IFISAs to consider this tax year

However, Narinder Khattoare, chief executive of Kuflink, emphasised the benefits of cutting out the intermediaries and going directly to investors.

“IFAs don’t understand the market,” he said. “They’re very reluctant to refer anybody in, which is why we go direct. We’ve never even bothered tapping into that IFA market, because we get a great influx coming to us direct.”

RateSetter’s Lupori cited Octopus Choice as an example of a platform that has successfully wooed IFAs, but added that they are “just one part of the broader intermediated space”.

“We’ve been speaking to a number of parties recently that are major platforms whose customers are interested in P2P and from their perspective, they see working with RateSetter as very important for their clients,” he said.

Read more: The importance of platform longevity

Iain Niblock, chief executive of P2P investment and analysis firm Orca, said that “IFAs are challenging but we need to crack that market to grow together.”

“There’s a key problem around suitability,” he added. “A lot of IFAs do a risk scoring on the client. If P2P lending’s not on the same scoring system, it’s immediately off the chart.”

Atuksha Poonwassie, director of the UK Crowdfunding Association and founder of P2P property lender Simple Crowdfunding, agreed that IFAs are “a slower burn” and predicted that it would be “a huge piece of work” to get them to understand the industry.

Financial advisers are typically reticent about recommending P2P investments to their clients, which has been attributed to a range of factors including the industry’s short track record, lack of awareness and a grey area around insurance cover. Read our special report on attracting IFAs here.

Look out for our full coverage of our IFISA roundtable event in the March issue of Peer2Peer Finance News.