Low interest rates and stock market volatility should encourage more independent financial advisers (IFAs) to reconsider peer-to-peer portfolio investments, platforms have claimed.
The adviser community has been slow to endorse P2P lending to clients, citing the need for a longer track record and the lack of a safety net such as the Financial Services Compensation Scheme.
However, in the new economic climate, platforms have been renewing their efforts to attract IFAs, citing the benefits of fixed-return investments, diversity of options and underlying securities.
“I would say that IFAs should be recommending a diverse portfolio across multiple asset classes for their clients and P2P should be within that portfolio, because you get a fairer share of the return added to that capital,” said Mike Bristow, co-founder and chief executive of CrowdProperty.
“It’s time for IFAs to really understand the market and the best players in it.”
Brian Bartaby, co-founder and chief executive of Proplend, said that P2P should be included within any IFA’s toolbox as part of their fixed income strategy, adding that it is a fixed income investment and therefore a credit risk, while stocks and shares is an equity investment meaning it is a price risk.
“Then within P2P you have secured and unsecured debt – you can decide which is safer,” he said.
Meanwhile, Daniel Rajkumar, founder and managing director at Rebuildingsociety, said that P2P lending as an asset class can be lucrative in a downturn.
“A lot of people have said they don’t know whether the P2P model will work and sustain itself because it hasn’t gone through a recession,” he argued. “Now’s our opportunity to prove that and get it to work.”
Read more: Advisers and ISAs