You mentioned a few months back an investment solution called Wrap. I have investments and pensions all over the place, can you give me any more information on this solution?
The problem for most of us is a changing lifestyle which means we have a legacy of holdings in numerous places. Not only are they impossible to manage and maintain control of, but it’s likely they are all layered with excess charges from older style schemes.
When we try to gain a view on their overall value and how they are geographically invested, it’s a mammoth task, with call after call to insurance company call centres with the standard telephone options of, press one to speak to someone untrained and naturally unhelpful, two to go to the moon and so on.
The UK once had a very sophisticated finance regime, but these legacies have been dragged into the future and insurance companies are desperate to hang onto their control of the UK investment market. In today’s market they are still looking at solutions equivalent to a coastguard trying to push a wet rope up a cliff face. The rope is useful, but times have changed and it needs to be used differently.
Wrap is simply a custodian for all your assets. Most of your pensions and investments can be held on there, and in one flick of a switch, you can see everything together.
All your previous pensions, investments, ISAs and PEPs can be placed in one platform to give you up to the second valuations by email or by access online.
Don’t mix this up with software that allows you valuations on your holdings online. Although nice and pretty, they are generally inaccurate as they simply record what units you have at a point in time. As months go by, that information changes and your data will soon be out of date.
Whilst older pensions generally have access to large clumpy managed pension funds, Wrap allows access to pretty much every fund on the market – the good bad and ugly. One of the key benefits is that the funds can be purchased at what is called creation price meaning that you can shave off the normal horrendous 5-7% upfront charge, despite how that may be hidden.
My real love of Wrap is that in one second I can analyse any issue to do with a customer’s investment and study any gains they have made. If needs be I can also turn their entire portfolio over in a morning.
After the initial set up of Wrap, there is no longer any need for paperwork! Oh the joys of it all.
So why is the UK so far behind? As I mentioned the UK used to have a leading approach to investments. This legacy of systems has been altered and changed so many times but the rest of the world has slipped by as they were starting from scratch. Whilst the total amount of savings and investments that could be held on wrap is estimated at £1.3 trillion (that’s a lot), the truth is the UK lags far behind with a pathetic 4% of customers holding assets on Wrap. 1 Australia for example has a massive 80% penetration on Wrap, simply light years ahead of the UK.2
Wrap will shortly disturb the status quo that the insurance industry has on consumers and they will be forced to change their business model rather than clinging onto their book of customers with their wet ropes.
There is no doubt customers have already begun to question their importance or relevance in the value chain and the large and expensive cut they take for little or no value.
With wrap, the consumer will be in a position to have a clear transparent charging structure at its cheapest price, whilst also having the ability to spread their risk across a vastly increased range of fund managers and funds they have never had before. All this, with valuations in a second.
For advice on the better wrap platforms visit our section on Wrap, or if you have a financial query, call 0800 0112825 or e-mail info@wwfp.net
Source:
(1) Adnitor, Citigroup, The Ad’Vantage’ of a Growth Platform, Page 66
(2) Adnitor, Citigroup, The Ad’Vantage’ of a Growth Platform, Page 64
The value of shares and investments can go down as well as up
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