We originally began negotiations with the James Hay (formerly Abbey) wrap in September 2003.
As a result, we undertook a detailed review of wraps and fund supermarkets over the following two years. This process culminated in Cavanagh Group deciding to use James Hay as our sole wrap partner.
The question why we selected James Hay could be followed by a subseq-uent question, why do we continue to use James Hay? The main reasons are a clear competitive price structure that is easy to understand for us and to explain to the client, a willingness to work with Cavanagh as a partner to develop our two businesses and sufficient tax wrappers for our clients’ needs.
We felt it was necessary to only use a single wrap provider because it makes our business process more definable.
You have a single process for utilising your wrap and not a different one depending upon which wrap is to be used. Clearly, we continue to use fund supermarkets such as Cofunds and FundsNetwork as these are not wraps. This leads us on to what differentiates between a wrap and a supermarket?
In simple terms, we would view this as the former can hold any share or fund compared with the latter only allowing funds from a defined range of mutual funds.
In terms of what it has done for our business, it makes it far easier for Cavanagh to compete on an even footing with, and win clients from, private banks.
Once the painful process of placing a client on to the wrap has been completed, it makes the management of that client easier and therefore more profitable. This is because it then saves time for both the consultant and the administrator. While James Hay continues to meet the needs of both Cavanagh and our clients, we will continue working with them. However, the marketplace is developing. Does James Hay offer the “perfect” wrap platform? Clearly, the answer is no and there is more work to be done. Onshore bonds need to be added and the discounts with some investment groups need to be addressed.
So long as James Hay develops the platform with us, then we can work in partnership with them.
Paul Clark is group technical manager at Cavanagh Group.