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Overseas wraps will move in to fill pension gap

The UK pension gap will attract further overseas entrants to the domestic wrap market, says Axa Distribution Services managing director Paul McMahon.

McMahon, who heads Axa’s Elevate platform, says the pension gap and lack of long-term savings in the UK means there is an “enormous untapped” market for potential overseas wrap providers to capitalise on.

He says: “The scale of UK pension underfunding is such that more than 50 per cent of people in their 30s have made no provision for their retirement. It is an enormous need that is not being served. This makes the UK market attractive for anyone looking in.”

McMahon says the flaws in the UK distribution landscape flagged up in Callum McCarthy’s 2006 Gleneagles’ speech also offer opportunities to platform providers.

He says: “Complexity has developed in our industry, with inappropriate focus on product sales rather than underlying investment structures and customers’ lifetime goals. The shift away from these structural failings is something that well delivered platforms can really support.” Australian bank Macquarie, which has just launched its UK platform, says the UK offers a huge opportunity for growth.

UK head of banking and financial services Jason Huddy says: “In Australia, 90 cents in the advised dollar is directed via a wrap account. In the UK, that is more like 30p in the advised pound so there is an opportunity for growth.”

But Concept Financial Planning managing director Paul Richardson says: “I do not think there are opportunities out there for overseas investors because the UK has a complex regulatory system and tax rules.”

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