Wrap accounts could alter the UK's financial services landscape dramatically, according to independent market analyst Datamonitor.
Its report says the UK is Europe's fastest-developing market for wrap accounts and speculation that large pools of assets will be suitable for inclusion in wrap accounts has been fuelled by the entry of several new players with wrap-like offerings, regulatory change and the success of wraps in the US and Australia.
Datamonitor forecasts that £150bn worth of assets in the UK could be under wrap administration by 2008 and that the IFA market will see the biggest impact.
The firm's survey of IFAs found that seven out of 10 UK IFAs are aware of wrap platforms, compared with two out of 10 in 2002. Almost three-quarters of wrap-aware IFAs believe their customers will be investing in wraps in the future, with 19 per cent of them expecting over 30 per cent of their clients to invest in wraps.
The high level of awareness and confidence in wraps in the UK market contrasts with the rest of Europe, where awareness of wraps is low, except in Italy where there is already a developed wrap market with over $150bn invested in these products.
But Datamonitor cautions against massive expenditure by life and pension companies on developing bespoke wrap platforms yet because the wrap market in 2008 will still contain less than 8 per cent of total retail investable assets.
Early growth in the wrap market will be at the higher-net-worth end of the market and the priority will be wrapping direct equity and mutual fund investment.
Datamonitor report author Oliver Guirdham says : “Awareness of wrap accounts has increased but it will take much longer for a large part of the market to start using the accounts for a significant part of their client base.”