View more on these topics

&#39Wrap will let IFAs shift to wholesale prices&#39

Wrap will enable IFAs to switch their clients from retail fund prices to wholesale fund prices, according to industry expert Paul Bradshaw.

Speaking at the PIMS conference last week, Bradshaw said wrap would let asset managers reduce their costs, opening up the possibility of shifting from retail prices at 100 basis points to wholesale prices at 15-30 bps.

Bradshaw also believes wrap will cut life offices out of the advice process as he says there is very little value left in life company new business.

He said wrap disintermediates life companies, giving the opportunity to disinter-mediate 50-75 basis points of the cost base.

Bradshaw predicts that wrap will be able to bring in profits of 13-21 bps for IFAs, calculating that running a fund supermarket generates 25 bps in income but the cost of del-ivering it ranges from 4-12 bps. But he says once a platform achieves critical mass, it will be able to negotiate chea-per prices from the mutual fund industry.

Transact head of sales and marketing Malcolm Murray said he now knows for certain that a genuine wrap service will reduce admin costs and overheads, giving IFAs more time to deal with clients.

Bradshaw said that at the moment there are 12 or 13 service platforms in development but he foresees that half of these will fail and there will inevitably be consolidation in the sector.

Once the market has settled down, Bradshaw believes there will be two or three aggregators remaining which will enable individual IFAs to differentiate their own wrap propositions.

Murray pointed to the Australian model, where five or six propositions now survive, with 100 firms using these systems or a combination of them to build their own offering.

Murray said: “Things will evolve here and once the market has settled down, I believe there will be six basic models adapted by the users for their individual needs.”

Bradshaw said: “There inev-itably has to be consolidation in the wrap sector.”


Independent view

Did you attend this year&#39s LIA conference in London? If not, you missed out on one of the highlights of the year. The conference was a tremendous opportunity to learn some new ideas – understand new concepts for business, gain some inspiration and motivation, and share time with some of the very best people in […]

Pension plunge

Apart from anecdotal evidence and personal experience, it is often difficult for IFAs to identify accurately what is hot and what is not in the corporate marketplace. Although most IFAs would be able to tell you what has been popular in their areas, analysis of the entire marketplace can often be hit and miss. However, […]

The yield shield

In the UK there is a general tendency to knock anything that is good, be it in sport, popular music, fashion or business. This rule has also applied to the buy-to-let sector. This market has grown at a great rate of knots over the last few years but it is constantly knocked. We are always […]

King reins in market

Are the comments of Bank of England Governor Mervyn King equal to a 25-basis-point rise in interest rates? Several commentators suggest that two rises of 0.25 per cent over a period of months have had much less psychological impact than one of 0.5 per cent. One says the property boom requires a much bigger rise […]


News and expert analysis straight to your inbox

Sign up


    Leave a comment


    Why register with Money Marketing ?

    Providing trusted insight for professional advisers. Since 1985 Money Marketing has helped promote and analyse the financial adviser community in the UK and continues to be the trusted industry brand for independent insight and advice.

    News & analysis delivered directly to your inbox
    Register today to receive our range of news alerts including daily and weekly briefings

    Money Marketing Events
    Be the first to hear about our industry leading conferences, awards, roundtables and more.

    Research and insight
    Take part in and see the results of Money Marketing's flagship investigations into industry trends.

    Have your say
    Only registered users can post comments. As the voice of the adviser community, our content generates robust debate. Sign up today and make your voice heard.

    Register now

    Having problems?

    Contact us on +44 (0)20 7292 3712

    Lines are open Monday to Friday 9:00am -5.00pm