We first came across wraps in the mid-1990s in the US. We admired the way that they worked in America but we had some reservations about the UK market, some of which have not really gone away.
The multiplicity of tax and product wrappers in the UK seemed to be a barrier to loading all of a client’s assets on to one wrap platform and, in my view, continue to be.
It is difficult to justify adding an existing product to a wrap when one of the consequences is to add charges to a structure where they may already be considerable.
Swift re-registration of client assets is possible in America and Australia but seems a long way off in the UK where it can take many weeks and sometimes months to transfer assets.
Nirvana for us would be a situation where client assets could be transferred without delay within their existing tax wrappers, including investment bondsNevertheless, we were enthusiastic early adopters of the Abbey (now James Hay) offering, because of its clear and transparent charging structure and open architecture.
As one of the few advisers in the UK to have access to institutional-grade funds, we see wrap platforms as vital to our offering a low-cost service which combines low-cost dealing with administrative efficiency. They also suit our feebased approach.
We have visited Australia and are hugely impressed with the wrap offerings there. James Hay is building a true wrap proposition, with Australian help and we are looking forward to seeing improvements later this year. In the meantime, we have developed our own wrap comparison tool to monitor James Hay’s competitiveness against the rest of the market and so far it holds up very well.
Noel Farrelly is director of Index Fund Advisors.