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Prediction of a new generation of wrap-of-wrap

Platform consultancy firm The Platforum has predicted a new generation of “wrap-of-wrap” models focused on cost rather than service could emerge.

Managing director Holly Mackay says platforms have not taken into account the demands of IFAs and could lead to a second generation of wraps.

She says: “Platforms have not listened to what IFAs really want their role to be and expensive features are turning IFAs off. There will be more focus on costs which could lead to the dreaded ’wrap-of-wrap’ model emerging, where it is all about price, not service.”

In its analysis of platform growth in Q1, 2011, published last week, figures show stagnant growth after total platform assets under administration rose by 3.62 per cent from £146.29bn in Q4, 2010 to £151.58bn in Q1, 2011. The biggest percentage increase came from Wealthtime, which grew assets under administration by 80 per cent from £100m to £180m.

James Brearley showed the worst percentage change, falling by 1.3 per cent from £750m to £740m.

Fidelity showed the biggest absolute growth followed by Skandia then Cofunds.

Skandia continues to hold the most assets under administration with £39.7bn, with Fidelity close behind on £36.2bn.

Seven Investment Management director Justin Urquhart Stewart says: “We are in a world of lower growth and lower ret-urns and lots of bells and whistles add a layer of cost which the client and adviser do not want. Too many platforms are designed from the platform point of view and not for the end customer.”


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