My view is that I do not believe this is necessarily a conscious attitude by providers but it does not make it any more acceptable.
It is easy to identify a couple of ways in which such attitudes manifest themselves. Platform to platform re-registration (P2PRR) is one such issue and another is the two-way flow of data between client management systems and wrap systems. The former has been an issue for as long as people have been talking about wrap. On the one hand, platforms have been keen to grow their assets by a process of re-registration from individual holdings over to themselves as nominees but they have steadfastly resisted a similar nominee to nominee process.
Various excuses (and I use the phrase deliberately) have been put forward for this, including there is no demand from advisers for such services (a statement that is patently not true) and the apparent difficulty of carrying out P2PRR, which is a more reasonable objection. Certainly, any solution needs to be widely acceptable to the whole market, must be scaleable and needs to be consistent across all who use it. The last thing we need is every wrap provider operating a different process.
There are, however, major consumer benefits that can be achieved by platform to platform re-registration between platforms, in part-icular ensuring efficient competition within the market. Given the impor-tance of this emerging sector, earlier this year, Adviser Forum restructured its grouping from an emphasis on business process improvement in the fund management industry to specific focus on issues around wrap and wealth management.
Meetings involving the majority of the leading advice firms, along with many of the main wrap providers, fund management groups and third-party administrators have iden-tified a number of priorities that the participants are working to address, inclu-ding platform to platform re-registration and twoway data-sharing with client management systems.
In achieving an acceptable model for P2PRR, it is appropriate to recognise the initial costs incurred by platforms in conducting the original consolidation on to the platform. Clearly, some providers may choose to put in place some element of exit charges, particularly if the original consolidation has only recently taken place.
While recognising the potential for such costs, charges of this type must be very much down to individual wrap providers. Some may take a no exit fee strategy and others may work to a different charging structure. The important thing is that clients and advisers should be free to move from platform to platform easily.
I am pleased to report that a potential model for P2PRR was presented to adviser firms within Adviser Forum on December 6. It got their whole-hearted support and the forum will consult with the community to drive forward delivery of an appropriate solution.
Let us be clear there is still more work to be done but it is apparent that the objective is achievable.
On the question of two-way movement of data, while prepopulation of data is a very obvious benefit in helping an adviser migrate clients to wrap platforms, it is essential that advisers maintain their own complete and independent record of the client relationship or the adviser will have to rely on the platform for a complete record of their client’s financial information which could severely inhibit their ability to move clients to different platforms if the holding platform becomes uncompetitive or the service become less than satisfactory. In my experience, the vast majority of advisers recognise this.
One of the main questions that wrap providers will inevitably be asked as part of any strategic discussions is their position on P2PRR but questions over the extent of two-way integration will, I believe, be just as much of an issue.
Since the start of January, the FTRC research team has been working on identifying the issues to be covered in the 2007 e-Excellence ratings for wrap and wealth management and these will be published in a supplement with Money Marketing in the spring.
In preparing the research, we have held meetings and workshops with a wide range of advisers, wrap providers and technology suppliers. As with all e-Excellence research, the main focus is to identify areas that make the difference between one provider being selected by an adviser and others nearly getting there but falling at the last hurdle.
Having identified these features and measured the providers’ ability to deliver against them, we will publish ratings identifying which organisations best match such requirements.
Through additional research, the process helps ensure that the providers’ focus is on delivering the services that advisers will value most. The feedback so far suggests that we will probably identify two specific ratings this year – one for wrap propositions that, as mass-affluent propositions, focus on bringing together various wrappers for packaged financial product via a single platform and a wider rating for wealth management propositions that can include more individual investments.
I believe it is far more widely accepted that wrap-type services have the potential to help the industry transform to the more service-related culture that is increasingly advocated. Those providers which, within those boundaries, best understand what advisers want and can deliver on it will be best placed to prosper this year.
Any organisations wanting to take an active part in either the Adviser Forum wrap activity or the wrap and wealth management e-Excellence ratings should contact Poppy Morgan at poppy. firstname.lastname@example.org or Ian McKenna at email@example.com or by calling 020 7863 0863.