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Wraps are barrier to trust business

The lack of true open architecture on many wrap platforms is the major barrier to increased take-up of investment trusts among IFAs, according to Baillie Gifford.

Speaking at the Money Marketing round table event, Baillie Gifford sales and marketing director Ken Edwards said he had hoped an increase in “true wrap” solutions would ease this problem but many had so far failed to deliver.

Edwards, said that speaking as a provider both of Oeics and investment trusts, it often frustrated him how few of the low-charging trusts are sold through intermediaries.

He said Transact is one of the few platforms not to put up such a barrier due to the way that it receives payment from advisers.

Transact managing director Ian Taylor said many other platforms have difficulty as they are funded by the asset rather than by the adviser or end-client and as long as this model persists it is not practical to have trusts on such platforms.

Taylor said at one stage Transact had 15 per cent of the investments held on its platform in investment trusts compared with an average of 2 per cent across the industry.

Selestia head of investment marketing Graham Bentley said platforms have to make a profit and platforms funded by fund company rebates have no incentive to provide an investment trust option.

He said the combined Skandia/Selestia platform will have an additional open architecture wealth management solution as part of the offering, allowing advisers the option to hold investment trusts and other securities on the platform, in early 2008.

Edwards said: “We have so many opportunities to sell open-ended vehicles and very little to sell investment trusts. In our surveys, accessibility from platforms came across as the main barrier for the general IFA when it came to investment trusts.”

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