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Popularity of wrap rises among IFAs

Two-thirds of IFAs are very likely to recommend wraps in the future up from just over 50 per cent a year ago according to a survey by Watson Wyatt.

The survey found that IFAs are most likely to consider recommending Skandia, Cofunds and Funds Network wrap platforms to customers.

The most commonly cited reasons why advisers think wraps will be successful include ease of administration and administration efficiency, cost, flexibility and investment choice.

But reasons why advisers thought wraps may not be successful included additional charges, lack of understanding by customers and advisers, lack of motivation for advisers to promote them and poor administration.

Around 75 per cent of IFAs were likely to recommend a wrap provided by an insurance or life company and four out of five were likely or very likely to recommend a wrap provided by an investment house.

Watson Wyatt senior strategy consultant Mike Williams says: “While IFAs are increasingly seeing the benefits of wraps they are under no illusions about their potential pitfalls.

“We found a strong preference for wrap providers – such as life companies and investment houses – who have a long-established relationship with IFAs. Having relevant experience and a wide range of products were among the reasons they have a big head start as wrap providers among IFAs.”

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