Almost two-thirds of consumers have never heard of wrap and many who believe that they do understand the term think it relates to tax or a folder for holding investments in, according to research by Hargreaves Lansdown
The company found that 63 per cent of clients have not heard the term wrap used in an investment context and only 18 per cent are familiar with the term platform.
Fund supermarkets have apparently become a key part of investing, with 72 per cent of consumers familiar with the term.
Hargreaves Lansdown surveyed 500 clients about their understanding of technol-ogy terms. Despite the company’s own Vantage platform marketing itself as a wrap, many of the respondents who say they understand the term think it is related to a product’s tax status or simply a folder in which a range of investments are held.
Understanding of the term platform is even worse, with the majority of the 18 per cent familiar with the term saying it relates to mortgage company Platform Home Loans, having a safe foundation or base of core investments largely held in blue-chip companies or a stock and share trading platform.
Thirty-one per cent say they do not know how to best describe Vantage’s own service.
Senior investment man-ager Ben Yearsley says he is surprised at the level of confusion around the term wrap because the concept has been in the market for about seven years.
He says: “The industry clearly needs to do far more to explain what a fund supermarket or wrap account actually is and what the benefits are.”
FS3 director Mike Godfrey says: “Most clients do not know what the terms mean but it does not really matter. That is our job as advisers to explain it to them.”