When I was asked to write a piece on wrap, I didn’t really know what I could say but quickly realised that the only thing I could talk about that could be even slightly interesting was our experience.
Around two and a half years ago, I set up Evolve as a comprehensive fee-based financial planning practice serving wealthy clients and savers.
When writing the business plan, it became clear that admin efficiency was key to the viability of the model, so I considered how best to build this efficiency into the business.
Having been a partner at a firm of stockbrokers, I realised that having custody of client assets brings considerable admin benefits. I also realised that a wrap service (or platform as I prefer to call them) is actually very similar to the custody/nominee accounts that stockbrokers have used for a number of years and therefore felt that using a wrap would help us to achieve our business aims.
At the time, we were looking to choose a platform, only Abbey and Transact were fully operational. We excluded Cofunds and Fidelity from our short list as although they are, in our opinion, still platforms, they are fettered and do not allow us to determine the level of remuneration with our client. Instead, they determine the level of our remuneration and the funds we can recommend.
We decided to deal with both Abbey and Transact, with Abbey being our prime option. We selected Abbey because it had the cleanest fee structure (in particular no up-front charges), was keenly priced, but, most important, it seemed to want to listen to how we wanted the platform to develop.
In contrast, we found Transact to be fairly set in its ways and not particularly willing to listen to our requests while also being more expensive with a pretty complicated fee structure and, worst of all, an initial charge. Nevertheless, we always had confidence in its ability to deliver a first-class service.
Two and a half years on, a number of things have changed.
Abbey wrap has become James Hay wrap. It has increased fees to a level which we believe is too high for most clients and is now not interested in listening to its users. It has not delivered on its promises and we are finding that the admin efficiencies we were hoping for have only partly materialised.
There are also a multitude of new players which fit broadly into two categories. The first group is the life insurer-backed platforms, which all have fees at around the level of Abbey or Transact and do not seem to listen to users.
The second group are the IFA platforms like Ascentric or Nucleus which seem to be working to a tighter cost and pricing model while also listening to users.
The only thing that has not changed is that Transact still has an initial charge and its service is still excellent.
I suppose we could take the view that Transact has got it right and use it for all our clients but unfortunately neither I nor most of my wealthier clients will accept the initial charge, even if the rest of its charges are pretty fair.
After all, there are plenty of other ways to hold assets on a custody platform without initial charges – just ask Peter Hargreaves or James Brearley.
I suspect that we are in a similar position to many of the readers of this column – treading water and waiting for someone to deliver what we really want.
For Evolve, this is just a simple, low-cost, highly efficient asset custody and wrapper admin service, so we can improve the efficiency of our business and concentrate on delivering first-class advice to clients.
Although my comments above are quite negative, we have been and are still very supportive of platforms generally and we still believe platforms are the way of the future for financial planners.
But the question remains will anyone actually deliver a beautiful wrap?
Antony Williams, Evolve Financial Planning.