Powerwrap launch given long odds

Some industry commentators are giving independent platform provider Powerwrap scant chance of success with the scheduled launch of its consolidated wrap offering this month.

Commentators suggest it is a particularly challenging time to launch the wrap, pointing to ongoing consolidation in the sector and recent failures, including Credit Suisse.

The launch follows the signing of a limited exclusivity agreement with Praemium in November last year, giving Powerwrap access to its V-Wrap technology and the ability to mine its customer base.

Powerwrap chief governance officer Peter Rowley said the agreement would give the wrap, which will initially offer a direct equities product and a separately managed account, a “key point of difference”.

“With Praemium having made major inroads into the accountant market through V-Wrap, and with our platform being based on V-Wrap, our platform forms a bridge between the planner and accountant roles.”

Powerwrap claims it will launch with three foundation clients, which it said are listed entities offering a combination of financial planning and accounting services that already use

V-Wrap.

However, Michael Heine, managing director of platform Netwealth, said he “could not possibly imagine a worse time” to launch a platform in the market.

One of the many challenges faced by the start-up, he said, is that planners will be “extremely cautious about its ability to survive in the long term”.

“The last thing an adviser would want to do in

the current market is move their clients on to a new platform which may

or may not survive.”

Heine said Credit Suisse was unable to make its wrap work even in a bull market, despite being a top-performing fund manager.

Wealthtrac head of distribution Matthew Johnson said clients are looking for a total solution, including direct shares, a full comprehensive insurance product and access to wholesale managed funds at a competitive price.

“That’s what a tier-one platform looks like in the present day market, and you need to be able to operate at this level if you are to be successful in the marketplace.”