View more on these topics

Wrap charges in

Paul McMillan asses the prospects for Ascentric

IFA-owned wrap Ascentric hits the market in March, offering advisers what it claims is an unrivalled charging structure aimed at wealth management IFAs with high-net-worth clients.

The six founding IFAs currently have 1bn of assets under management and Ascentric managing director Hugo Thorman is aiming for the wrap to have built this up to 5bn by 2010. But in a market already crowded by several propositions – and media reports of some struggling – what are the chances of Ascentric carving out its own niche?

The wrap will be launched for the six founding IFAs in March, offering a service for all advisers from May. Thorman says it will charge advisers 25 basis points for the service but will offer any rebates given by fund managers back to advisers. There will be a 300 minimum annual charge but he says any investment higher than 120,000 will effectively be free from charges.

“Our proposition sets a new standard for a new industry offering unrivalled levels of straight-through processing and integrated functionality across stocks, funds and cash at the best price in the market,” says Thorman.

Transact head of sales and marketing Malcolm Murray says there is plenty of room in the market for new propositions and Ascentric certainly will not be the last entry to a sector that is not fully developed.

He says Transact is an example of a platform flourishing without major provider backing and sees the independent nature of Ascentric as a virtue that will be attractive to advisers.

But he says it is important that new entrants do not simply focus on price, striving to undercut competitors while perhaps overlooking issues such as quality and robustness of service which need just as much attention to ensure longevity.

Cofunds marketing and product director Mark Jones agrees there is huge potential for new entrants but cautions about the difficulties that others have faced and the time it takes to build an established and credible platform in the eyes of advisers.

Jones says Cofunds has invested 140m in the platform and, as well as this financial commitment, the infrastructure has to be in place to deal with complex legacy issues to allow all adviser business to be held in one place.

Jones would also like to see more details of Ascentric’s pricing structure as he finds it hard to believe it will be able to undercut Cofunds. “

Announcing market strategies are the easy part of the process, the hard part is delivering on them over a period of time and generating adviser confidence,” says Jones.

Ascentric bought the FundsDirect fund supermarket platform last summer, after its wrap project was dropped, and Thorman hopes that integrating this with the web-enabled stockbroking platform Investment Sciences will provide the right infrastructure to offer a complete service to advisers.

Lifetime commercial director Rob Fletcher says many different funding models for wrap platforms can be used but he believes the majority of advisers want the reliability that comes with a major shareholder who is heavily involved in the long-term savings industry and has the financial muscle to provide significant investment where and when its needed.

Fletcher acknowledges the fact that Lifetime is now fully owned by Norwich Union could be offputting to some advisers who would rather do business with an independent platform but says these advisers need to ask important questions about future investment and how the shareholding of proposals such as Ascentric will work in practice.

Fletcher also questions Ascentric’s decision to offer three different offshore bonds within the wrapper, from Friends Provident, Scottish Equitable and Axa, saying the bonds are almost congruent, basic offerings and only bring increased complexity to the service.

On the issue of being able to undercut Lifetime’s pricing structure, Fletcher says the market needs time to see if Ascentric’s plans will be viable when it comes to market and will depend on how much investment is ploughed into the proposition.

FundsNetwork head David Dalton-Brown welcomes the addition of another platform to those already available but reiterates the expense of building platforms and constant development required to keep a platform going.

“Given the scale and fast-growing nature of the market platforms have to have deep corporate pockets to get the returns needed and do enough business to plough sizeable profits back into them,” says Dalton-Brown.

He expects life and pension providers yet to initiate their own wraps now to move quickly into the arena as platform services continue to grow hugely, noting Funds-Network grew its assets by 50 per cent last year.

Financial Technology Research Centre director Ian McKenna says this year will usher in more competition and growth than ever for wrap and survival and prosperity is going to depend to a large extend on the depths of platform pockets.

He says it is going to be tough for independent new entrants to compete with the financial strength of the likes of Norwich Union and Fidelity and warns they will have to go a long way to convince advisers to use their service.

McKenna says it is not just about providing the technology as the uptake of wrap requires a cultural change to an adviser’s work patterns so platforms need to also prove they can offer complex business support and administration.

Ascentric has a lot of challenges to face as it prepares to roll out its wrap but Thorman insists questions about investment are unfounded and the platform is ready to fight for its place in the scramble for business as the wrap market contracts, offering advisers a unique service they will want to be part of.


Revenue relents on Standard tax

The Revenue has lifted a tax threat facing Standard Life policyholders. A-Day rule changes would have meant with-profits pension clients being taxed immediately at 40 per cent on their demutualisation windfalls, even for members who are lower-rate or nil- rate taxpayers. Standard lobbied HMRC after spotting the anomaly and the Revenue has set out draft […]

Investors confused about Tessa-only Isas, warns Pima

Consumers’ investment options are being limited bec- ause they are confused by marketing literature from providers about Tessa-only Isas, warns Pima. Technical adviser David Beaston says the marketing material from some firms does not make it clear that Tessa-only Isas no longer formally exist and should be treated simply as cash Isas. Beaston says the […]

Civil engineering

The Civil Partnership Act gives new rights to couples, prompting a review of their financial affairs

Global income: preparing for a rate rise…

In the five years since we launched the Artemis Global Income Fund, its manager Jacob de Tusch-Lec has built a distinctive portfolio that is first among its peers. Here he explains why his “quality, cyclical and value yield” stocks, and flexible approach, leave the fund better placed to benefit from uncertainty than funds that depend […]


News and expert analysis straight to your inbox

Sign up


    Leave a comment


    Why register with Money Marketing ?

    Providing trusted insight for professional advisers. Since 1985 Money Marketing has helped promote and analyse the financial adviser community in the UK and continues to be the trusted industry brand for independent insight and thought leadership.

    News & analysis delivered directly to your inbox
    Register today to receive our range of news alerts including daily and weekly briefings

    Money Marketing Events
    Be the first to hear about our industry leading conferences, awards, roundtables and more.

    Research and insight
    Take part in and see the results of Money Marketing's flagship investigations into industry trends.

    Have your say
    Only registered users can post comments. As the voice of the adviser community, our content generates robust debate. Sign up today and make your voice heard.

    Register now

    Having problems?

    Contact us on +44 (0)20 7292 3712

    Lines are open Monday to Friday 9:00am -5.00pm