Wraps & Platforms: Concluding thoughts

Sunday, 14th June 2009 10:09 - by Resident IFA

This is part 2 of my ruminations about my recent visit to a conference for Independent Financial Advisers (IFAs) and the investment industry. Definitions: Wrap – A way of seeing all of your financial products, including such as life insurance, in one place online. Platform – The means of accessing and managing more investment-led products (i.e. Pensions and Investments) online, including the ability to switch funds, obtain current values, and access a wider investment management choice. On Day 2, the Financial Services Authority (FSA) made a presentation. What immediately struck me was the presenter. He seemed a nice fellow, but wore a grey suit and had uber-grey 5 o’clock shadow, doing nothing for the ‘grey’ image of regulatory bodies and the like. Perhaps he needs to see a colourist?! Anyhow, the main thrust of his address was that IFAs need to undertake their due diligence investigations when choosing a Platform or Wrap for their Clients. Also, the message of ‘one size doesn’t fit all’ seemed quite sensible. From my perspective, one thing I took from the two days was that this portion of the financial services industry has a way to go yet. I couldn’t envisage my company committing to just one Platform or Wrap in the foreseeable future. The encouragement I took was that there are a lot of companies trying to improve their offering to secure their space in this burgeoning market, with innovative newcomers keeping the ‘big boys’ on their toes. Hopefully, Platforms and Wraps will start making profit more consistently in the near-future, apparently running a Platform being a thankless, cash-haemorrhaging exercise up til now. One of the main participants at the conference, Cofunds, have apparently only just seen their first year’s operating profit…after being in existence for at least 7 years. So, as always, challenge your IFA (You really should have one) as to what benefits they see for you in a certain Platform they are recommending. Gain online access yourself – as that is the point – Cofunds and others allow this. Also, some Platforms were perceived as costly. Ask what the additional cost of all this fantastic functionality will be to you in terms of additional Platform charges. I’ll finish by leading into another topic I feel strongly about and will cover in more depth shortly - ’New Model Adviser'. This is the FSA’s push (via the ’Retail Distribution Review’ (RDR)) to have all IFAs at a certain level of qualification by the start of 2013 (Agreed) and for all Advisers to have their service and advice paid for by way of fee, not commission (Hmmm). Until next time…