Widows uses Fidelity Funds-Network to power its retirement account and intermediaries’ director Simon Massey believes there is more mileage in this structure than in launching its own platform.
He says: “We are looking at what is going on but we know wraps to be very expensive and very difficult to ever make a commercial return. We believe there is more mileage in us providing propositions that are right for the customer and the adviser and that link to the IFA’s back-office system.”
Massey has also criticised advisers for not doing adequate due diligence on platforms.
He says: “There seems to be a headlong rush towards wrap but my concern is advisers have not done adequate financial due diligence. These are expensive beasts to fund through the operational losses in the early years to profitability.
“If an adviser places all his clients holdings on a wrap, it can simplify their administration and increase their trail revenue but the client is typically paying for that through the platform charge and that is often not offset by the discounts that platforms are able to get from fund managers and in some cases there is a lack of transparency about those rebates.”
Massey challenges whether advisers should be placing all their business with a single platform. He says: “I am not sure how that sits within the definition of independence and, if that platform gets into trouble, where does that leave advisers?”
But Investment Quorum director Petronella West says: “We consider wrap to be a management tool as opposed to a product. Using a single wrap proposition streamlines your business and allows you concentrate on your clients.”