Primary motivations
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After reviewing the client base to see who could benefit most from wrap, the next step was to identify which wrap provider we would use. In an ideal world, we would have liked the wrap charging structure of James Hay with the functionality of Standard Life.
Unfortunately, no such provider existed and so at the time we opted for James Hay and hoped that in time the wrap functionality would be developed. After about 12 months, it became clear that the James Hay wrap functionality was not developing at the rate we had hoped and started looking to see if any other providers had taken wrap to another level.
Axa had just launched its new Elevate wrap platform using a very similar transparent charging structure but the same software as Standard Life. Elevate was available in two versions - one structured to compete with the likes of Fidelity FundsNetwork, which I refer to as a catalogue wrap, as you can only select investment funds which appear in their fund list. The alternative version will satisfy the wrap purists of the IFA market as your fund selection is not restricted in this way.
In addition, the catalogue version has a bundled charging structure similar to that of FundsNetwork, whereas their pure wrap has an explicit charging structure, where the costs of the wrap provider, the fund manager and the IFA are all clearly isolated as separate charges. primary wrap provider and have found Axa is working hard to continually improve functionality and we regularly feed back ideas to the team. One feature we have requested is a capital gains tax calculator on the tax wrappers, where a client is either selling or switching a fund holding so that in any one tax year it is easy to calculate how much of the client's CGT allowance is still available. The integration with any back-office systems will always cause a few glitches but to date we have found so long as we keep communicating any issues to Axa Elevate, they are quickly resolved.
All the clients we have approached regarding wrap have been enthusiastic about the benefits which include consolidation of their existing investments, reduced admin burden, simplified reporting to HMRC, the ability to move funds from one tax wrapper to another and online valuations.
I believe wrap will become increasingly key to the way successful IFAs run their businesses. Wrap allows an adviser to identify a client's investment needs, implement a strategy and monitor investments. It will remove the need to chase new business which has become more and more the place of the banks, building societies and insurance companies.
Alun Pells is director of Condy Mathias Financial Planners
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