We have been using supermarket platforms for some time but more recently we switched to using a full service wrap proposition. In truth, until then I was not convinced that the benefits they offered represented value for money for my clients. However, in the last couple of years the market has moved on apace, with newer entrants bringing more comprehensive propositions and keener pricing.
There is no doubt the retail distribution review will impact on how investment advice is implemented and a wrap makes things much easier. However, I am also concerned that, while the principle of the RDR is right, we are in danger of swapping adviser experience with the ability to pass paper qualifications.
With 18 registered individuals, I am looking to achieve a balance of clients complemented by industry experts and the necessary technology to support them, which is why we are currently planning how to make the most of the experience we have alongside the need for level-four advice.
One area where technology, and especially wraps, may help is in encouraging younger people to enter the industry. For those of us of a more mature vintage, we provided many of the services offered by wraps long-hand and I genuinely believe that was an invaluable benefit.
The benefits, efficiencies and cost savings of wraps mean I would never want to turn the clock back and I can also see the sheer practicality being of great interest to young advisers who are used to having “an app for everything”.
The benefits, efficiencies and cost savings of wraps mean I would never want to turn the clock back and I can see the sheer practicality being of great interest to young advisers
To this end, I expect to see greater use of model portfolios for different risk profiles, enabling us to focus on a series of performing funds. The use of the Novia wrap allows us to do that – we can use the riskprofiling tool, we have a full choice of investments from the market and the efficient administration helps us keep our charges down for the client.
Another reason we choose Novia was the transparency of the rebates it negotiates. These go straight back to the client and that is important.
Having been in the industry for many years myself – I became an adviser in the early ’90s – we are seeing a steady shift in attitude from clients themselves as they are becoming more knowledgeable about their investments.
Transparency from the Novia wrap also follows through to the online reporting and clients can see their portfolios and valuations if they want to. I think this helps also with regard to the growth of a business based on trail commissions, which not all clients immediately grasp.
If charges are laid in front of them and investment performance is visible and reviewed by us, it helps them to understand the need and therefore cost of the ongoing service.
Overall, we are pleased to have chosen Novia and although it is a new player in the wrap space, its sales and management team have longstanding experience. We are still debating whether you should have two main wrap providers – for example, a larger player that may acquire
other players – but for the moment we are enjoying the service we get from Novia and the efficiencies it brings to us and our clients.
Steve Hunter is managing director at Kingdom Investment and Mortgage Services