A Bristol-based firm that has recently opened an office in Glasgow to advise businesses on alternative pension-led funding has rebuffed criticism that its strategies are too risky.
Clifton Asset Management has said the funding model has the potential to provide £100 billion of finance to bank-starved SMEs, and has already helped 1200 firms and secured 10,000 jobs.
It works by using a business owner's self-invested pension to inject money into his company, secured against its independently-valued intellectual property (IP).
Clifton, which employs 100 people and has put 1000 schemes in place, has this month staged seminars in Glasgow and Edinburgh.
But financial planners have expressed doubts over the strategy, with one telling The Herald that he knew of "examples of this type of manoeuvre leaving a Sipp virtually worthless".
The Financial Services Authority had "made it clear that investors should be aware of the pitfalls of such a strategy for their pension", he added.
Adam Tavener, founder and chairman of Clifton, hit back after the company last week shared an "alternative funding" platform at Edinburgh Chamber of Commerce.
He said: "Some of the doomsaying and indignation around this is because it reverses the seemingly inexorable flow of money from people to fund management groups. If we were signing up deals that were clearly inappropriate, we would not be in business."
He added: "Most people don't think there is any IP in their business, they think that only applies to James Dyson, but all we are doing is demonstrating that a business has an intangible value – its goodwill, its branding – and effectively bringing forward a valuation that might only be made when the business was being sold, and using it as a funding tool instead."
Mr Tavener said: "Most of the speakers talked about how IP in a business is being ignored by banks."
He said for many owners it made more sense to "back themselves" and invest £40,000 from their pension into their own business, than to "pay a £40,000 contribution into a fund whilst having a £40,000 overdraft secured on their house".
Clifton did not claim the solution was suitable for everyone, and admitted there were occasional losses, but Mr Tavener said: "If you started out with a £250,000 pension, invested £70,000 in your business, and lost £30,000 of it, fundamentally that is not life-changing. There is a lot of emotion and obfuscation around the word pension – it is your money."
Why are you making commenting on The Herald only available to subscribers?
It should have been a safe space for informed debate, somewhere for readers to discuss issues around the biggest stories of the day, but all too often the below the line comments on most websites have become bogged down by off-topic discussions and abuse.
heraldscotland.com is tackling this problem by allowing only subscribers to comment.
We are doing this to improve the experience for our loyal readers and we believe it will reduce the ability of trolls and troublemakers, who occasionally find their way onto our site, to abuse our journalists and readers. We also hope it will help the comments section fulfil its promise as a part of Scotland's conversation with itself.
We are lucky at The Herald. We are read by an informed, educated readership who can add their knowledge and insights to our stories.
That is invaluable.
We are making the subscriber-only change to support our valued readers, who tell us they don't want the site cluttered up with irrelevant comments, untruths and abuse.
In the past, the journalist’s job was to collect and distribute information to the audience. Technology means that readers can shape a discussion. We look forward to hearing from you on heraldscotland.com
Comments & Moderation
Readers’ comments: You are personally liable for the content of any comments you upload to this website, so please act responsibly. We do not pre-moderate or monitor readers’ comments appearing on our websites, but we do post-moderate in response to complaints we receive or otherwise when a potential problem comes to our attention. You can make a complaint by using the ‘report this post’ link . We may then apply our discretion under the user terms to amend or delete comments.
Post moderation is undertaken full-time 9am-6pm on weekdays, and on a part-time basis outwith those hours.
Read the rules hereComments are closed on this article