This was a big step but we left with our heads held high and a determination to operate on the principle that if we looked after our customers, they would look after us.
Having previously worked as IFAs for a private bank whose core business was that assets were under management via their own nominee service, the concept of wrap felt second nature to both of us in our new venture.
Having experienced this, we knew it was an efficient way of running assets and the key to delivering our service principle.
We sat down and set our wish list – avoid the potential trap of commission by ensuring that we controlled our own remuneration, set a fee for purchasing assets and a recurring fee for looking after said assets, open architecture structure, the ability to purchase assets at net asset value, provide immediate view of mutual funds, Isas, pension assets and shares, the ability to record and value other investments such as National Savings certificates, bank deposits, holiday homes and bonds, and finally to provide clients with the ability to view this any time anywhere in the world, thereby providing a window on all their assets.
At the outset, the business had strengths and weaknesses, it was being set up from scratch and therefore had no legacy issues but no existing client base and therefore it was vital we got it right.
We could not afford to upset a client so off we went, speaking to a number of firms, Transact, Cofunds, Selestia, Norwich Union, Funds Network and Standard Life.
Having looked at the offerings, it was decided that we would go with Standard Life. Yes, their wrap was relatively new but then so were we. It met our criteria and seemed like a safe pair of hands.
The Standard Life team seemed genuinely interested in listening to us and developing together. We grew our assets under management and developed our offering and so did they.
We took on staff and Standard Life provided the wrap training.
For us, the main strength of a wrap is the efficiency it brings – one application form pre-filled, no matter how many different mutual funds chosen, the ability to identify all clients with a particular asset or fund and to be able to dispose of it with the press of a button. Consolidated reports and dividend vouchers and the ability to provide limited cash holdings which can be used for further purchases or transfer these to a nominated client bank account on the same day if a client needs urgent funds.
The clients have definitely got the concept. The ability to have a diversified portfolio of asset classes and investment houses but held in one place.
This, in conjunction with our service proposition, has led to referrals and further growth. If you see the analogy of running client assets as a car then the wrap is the engine.
If it runs smoothly, then all is well, if it is spluttering, you are in trouble and it can make or break your service proposition. My advice is embrace the technology but choose carefully and one that fits your own criteria.
Phil Cain is director of CDC Wealth Management