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Wrap to bring separation

The development of wrap will see the death of provider involvement with top-end advisers, according to Mazars.

Chief executive Paul Willans told PIMS delegates last week that the emergence of true open architecture and the move to place assets under adviser control will lead to a separation as providers concentrate on developing platforms for their own advantage.

He said the adviser community needs to look closely at the agenda behind the provider move into platforms as they move away from the traditional commission model.

He said that provider platforms are trying to retain control of the assets under management but advisers themselves can move from having assets under influence to assets under control with the development of open architecture.

Willans said: “If this development happens, for the true IFA we will see the death of the involvement of the provider as they will be looking at developing platforms to their advantage rather than to ours and therefore I see a separation.

“The providers are not doing this out of the goodness of their hearts. It is about distribution and, more important, it is about retaining control of the asset, a fundamental thing.”

He criticised the technology behind many of the provider-owned wraps and questioned the commitment of parent companies to continue to fund them in the long term.

Thinc Group director of wealth management John Abraham said advisers could not trust life companies when it comes to wrap and suggested stochastic modelling tools may be being used to bias the platform provider’s own funds.

He said Axa’s ownership of Thinc was not relevant in the discussion as the Thinc wrap, and assets under management, will be owned by the advisers.

Winterthur Life managing director David Thompson said many provider moves into wrap were defensive strategies and all providers will have to grapple with difficult questions on adviser independence and satisfying both the adviser and client.

He said the distributor “land grab” would calm over time. He predicted some casualties but said this would eventually lead to platform profitability being prioritised.

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