With life companies set to enter the corporate wrap sector, will there be an opportunity for IFAs to take on more group business?
In August last year, Friends Provident signed a contract with FNZ to power its corporate wrap and in September Axa said it is considering launching a corporate platform alongside its Elevate platform. Standard Life, which also uses FNZ for its retail platform, says it plans to bring its corporate wrap to the market by the end of 2010 and Aegon is to launch a platform within a year but will not specify whether it will be corporate.
Last week, Legal and Gen- eral said it is making enhancements to its corporate wrap, including the addition of an employer-financed retirement benefit scheme and a cash Isa.
Managing director of workplace savings Tony Filbin says: “We will see a general upping of the game over the next 18 months or so.” With more interest in the market, Filbin says there will be a need for financial advice. He says: “IFAs will be advising the employee on benefit types, investment choice, default funds and fund range. There is a need for advice in all those areas.”
Axxis Financial Planning director Owen Wintersgill says the prevalence of corp- orate wrap could bring more IFAs into group business.
He says: “If, logistically, it is more straightforward using wraps, then barriers to working in that market can start to be removed.
Tony Filbin: ’IFAs will be advising the employee on benefit types, investment choice, def ault funds and fund range. There is a need for advice in all those areas’
“It can be quite difficult for an IFA firm to manage a group scheme because they get paid up-front commission and then have ongoing administration burdens that will last indefinitely. Anything that can help them in the ongoing administration of group schemes is likely to be well received.”
Yellowtail Financial Planning managing director Dennis Hall says: “As other areas of advice are becoming less profitable and more commoditised, IFAs are having to look outside their normal areas and the corporate sector will be a natural area to extend to.”
But Threesixty partner Phil Young says corporate wrap is “a very long way off” becoming mainstream, and believes that IFAs will be cut out of the equation.
He adds: “Anything resembling corporate wrap will be pitched directly by the platform providers, predominantly at large blue-chip com panies and so is unlikely to be of any real interest to intermediaries, other than large, specialist employee benefits consultants.”
Milestone Wealth Management principal Neil Mumford says: “I do not necessarily believe that more IFAs will go into the corporate area but they will provide more efficiency for advisers currently advising on a group basis.”
GBST chief executive Rob DeDominicis believes that to make corporate platforms work, the industry must make them look less like an IFA portal. He says: “We must remember that this is not an IFA-led proposition. We need to be able to provide something simple for the employer.”Making them look less like an IFA portal is very impor- tant. This is a very different world and you want to engage with the end-consumer.”
Logica director of insurance and retail financial services Andrew Lloyd says an industry-standard approach, similar to the ISO 20022 standards,would help to grow the corp- orate wrap market.
But Finance and Technology Research Centre director Ian McKenna says: “It is a lovely fantasy, especially if you are the IT company that gets to supply it all. Corporate wrap is one of the most competitive parts of the market and no one is going to sit around and wait for standards to emerge while their competitors will be out there grabbing market share.”