It's a wrapPosted on: 13 September 2016 by Steve Wanless
Steve Wanless of WWFP looks at how wrap services have opened the door to more transparent management of your financial portfolio
Advancement of smartphones and apps means you can keep an eye on your bank account or accounts 24/7. However, changing lifestyles can mean we have a legacy of holdings in a variety of places.
Not only are they impossible to manage and maintain control, but it’s also likely they are all layered with excess charges from older style schemes.
When we try to gain a view on their overall value and how they are geographically invested, it’s a mammoth task, with call after call to insurance company call centres with the standard telephone options that take up, what feels like, hours of your life.
The UK once had a very sophisticated finance regime, but these legacies have been dragged into the future and insurance companies are desperate to hang onto their control of the UK investment market.
Wrap is simply a custodian for all your assets. Most of your pensions and investments can be held in there, and in one flick of a switch, you can see everything together.
All your previous pensions, investments, ISAs and PEPs can be placed in one holding to give you up to the second valuations by email or access online.
Don’t mix this up with software that allows you to get valuations on your holdings online. Although nice and pretty, they are generally inaccurate as they simply record what units you have at a point in time. As months go by, that information changes and your data will soon be out of date.
Whilst older pensions generally have access to large clumpy managed pension funds, wrap allows access to pretty much every fund on the market. One of the key benefits is that the funds can be purchased at what is called creation price meaning that you can shave off the normal horrendous 5-7% upfront charge, despite how that may be hidden.
Where wrap works best in our opinion is that in one second we can analyse any issue to do with a customer’s investment and study any gains they have made. If needs be we can also turn their entire portfolio over in a morning.
And after the initial set up of wrap, there is no longer any need for paperwork!
Wraps were first introduced in the UK in 2000 after launching in Australia and New Zealand. By 2010 approximately £230bn in assets were held in wraps, while the advent of the Retail Distribution Review (RDR) in 2012, provided a catalyst for investors to move all their holdings into one easily access portal with the help of their independent financial adviser (IFA).
There is no doubt customers have already begun to question their importance or relevance in the value chain, as well as the large and expensive cut they take for little or no value.
With wrap, the consumer will be in a position to have a clear transparent charging structure at its cheapest price, whilst also having the ability to spread their risk across a vastly increased range of fund managers and funds they have never had before. All this, with valuations in a second.
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