My wrap journey started just over a year ago after stumbling across Nucleus. Up to this point, I had investigated the wrap propositions of other providers but struggled to come to terms with the extra layer of charges that my clients would pay.
I could see the benefits of simplified administration and a greater choice of investments but felt that these already existed to some extent with fund supermarkets. Furthermore, in most cases, the charging structures were anything but simple, with some charging for money in, nearly all charging a portfolio fee and some also charging fees for switches. Not only did this make it difficult to compare the cost but it also made me question how easy it would be for a client to understand.
Then, at a conference hosted by Dimensional, someone directed me to Nucleus. Just as with Dimensional, there was a selection process to go through. In addition to this, in order to use this wrap, I would need to make a capital investment into the proposition. You might well ask why would an advisory firm pay to become a shareholder in a wrap when other avenues are available which do not require such a commitment. As I look back over my year with Nucleus, I believe this is the key factor that sets Nucleus apart. Not because of the potential investment return on the capital deployed but because it has brought together like-minded IFA practices.
When coupled with a management team at Nucleus that are friendly and approachable, this has created a team environment which brings the manu – facturing and distribution process closer together.
Over the years of being an IFA, I have seen how the life offices have manoeuvred in and out of product areas, often leaving the IFA to face the music. This perhaps was one of my biggest wrap fears – what would happen if the provider changed the terms, went direct to the public or even pulled out of the market? Being involved as a stakeholder may not eliminate all these factors but at least it provides me with some influence.
It is fair to say that it may have been easier for me to use one of the offerings provided by a high-profile name rather than explain who Nucleus are to my clients. However, this option would have cost my clients a little more and once again I would have been a small player at the mercy of a large institution. Instead, I now feel part of something bigger and, more important, ready for the retail distribution review because my clients now have a transparent proposition with the cost for advice, funds and wrap all shown clearly with no hidden rebates. In respect of my clients, the Nucleus brand was no real hurdle and now that they are able to see their investments online they feel like they have more control.
From an administration perspective, the Nucleus wrap does what it says on the tin. The use of a DX service now means that we use very little post and our incoming post has reduced significantly, as have calls from broker consultants. All this means that I have been able to focus more time and energy on seeing clients – the bit that I enjoy and the clients value.
Mark Reeve is director of Reeve-Sims