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Wrap view: Lee Robertson

I read that IFA platform assets are about to exceed £80bn this quarter in 2009.  This is a serious amount of investors’ assets now migrated from the traditional providers of managed and with-profits funds.  I do accept however that some of these assets have not moved very far but are held on wraps operated by insurers such as Standard Life and Axa but they are having to radically adapt their business models to accommodate what are in effect servicing fees for access to ‘best of breed’ external managers and receive far less direct investment into their own stable of funds. 

This must surely be to the long term benefit of clients and advisers but one has to wonder about the life companies’ views on this mass migration.  The number of life companies is surely set to shrink further as a result of this as less and less investment capital flows their way, particularly those who have fallen behind with the current mood of open architecture increasingly demanded by advisers and their clients.

I don’t suppose it will be all plain sailing for those who have made the move however as it is looking to be a very crowded space and the regulator still appears to be struggling with the pace of change as well as becoming suspicious of the way many wrap providers derive income.  The recent letter to wrap provider CEOs requesting details of revenue sharing agreements, percentage point spread of charges, charges for fund managers to get onto platforms etc is a good example of this.

However, in my opinion I can think of no other investor initiative, either industry, political or regulatory that has brought so much beneficial change for clients so quickly.  That ever more transparent charging, on-line access, fund discounts, instantaneous switching and valuations is being delivered and the end of the nonsense of capital units, ‘bonus’ units, loyalty bonuses and waiting weeks for valuations is surely what TCF and RDR might just hope to achieve.

Lee Robertson is chief executive of Investment Quorum


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