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Clash over conflict of interest in wrap shares

Advisers do not run the risk of conflicts of interest by receiving shares in a wrap, according to Helm Godfrey managing director Bruce Wilson.

At the MM retirement planning summit in Nice, Wilson said he chose to use the independent Nucleus wrap rather than a provider-sponsored offering because there are no guarantees that a provider-led wrap would be successful as it is often peripheral to providers’ core business.

He cited American Express’s withdrawal from the market as an example. Wilson said: “It has to be a core part of their business and not just peripheral. I would rather buy shares in an independent wrap and later if it did not work out, I would move my business across to another.”

But FS3 managing director Mike Godfrey said receiving shares in a wrap does pose a conflict of interest as advisers would be more likely to stay with that provider than move their clients to another if there were service issues.

Godfrey also expressed concerns about product providers that offer assistance to IFAs moving on to their wraps, particularly on changing their business models, and questioned the motives behind this.

He said: “I would say that advisers should not be using providers to change their business model. I have a problem with the Standard Life approach because I want to be able to change direction if I choose to. If I have sold my soul to them then I can’t do that.”

However, Burns Anderson chief executive Mike Hughes said: “The selling point of Standard Life and Norwich Union is the fact that they can offer assistance to IFAs in this way.”


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