In an evolving industry, it has never been more important for advice firms to be positioning their businesses for growth and innovating to meet the opportunities and challenges ahead. Wrap platforms play a central role in helping advisers achieve this.
Over recent years, the principles of wrap platforms have evolved to meet the shifting needs of clients, as well as the changing market and regulatory landscape. We have seen platforms advance to create new opportunities and improve investment outcomes for advisers and their clients.
Importantly, throughout this evolution the fundamentals of wrap platforms have remained.
Quality administration, flexibility, greater visibility, efficiency and control remain the key benefits for both advisers and their clients, and the reasons why a significant number of investors choose wrap to do business with.
Flexibility and efficiency a central focus
Improving efficiencies when it comes to managing time and administration is a top priority for businesses, as evidenced by Macquarie’s recent accounting and financial services report, which found getting drowned in email, paperwork and compliance was the biggest challenge for all firms, and is an impediment to strategic thinking.
The administration and compliance burden is also felt more acutely by smaller practices, which are often yet to fully scale their technology solution.
Wrap platforms offer an easily integrated solution for firms and are able to pick up much of the vital administrative functions advisers would otherwise be burdened with — allowing them to easily make changes to a client’s portfolio and collate statements, reports and various share registries with ease and efficiency, while still providing a greater range of investment options and portfolio flexibility.
These time and cost benefits ultimately flow through to the end client. One example of this comes in the ability for wrap platforms to provide a single view of consolidated tax reporting.
With a wrap platform, advisers can generate everything an accountant needs to know, whether its income components or cost base information, and accountants can also access wrap platforms directly, bringing peace of mind to clients where they know these complexities are being looked after in what can often be a busy period.
With this flexibility also comes even greater transparency for investors, with a wrap platform providing them with access to view their portfolio all in one place, whether they are the type of investor that checks their portfolio once a day or only once a year.
Central to our approach has been working openly with advisers to continue to further enhance our own wrap offering, and ensure they have the flexibility they need in using our solutions, the insights and expertise to support their work, and the knowledge they are working with a trusted, long term supporter in our team.
This includes investing in digital solutions that allow us to further support our advisers, with new features and tools to create greater efficiencies for clients.
While there are a range of different approaches taken by the various wrap providers, we use adviser feedback to drive our business decisions — from what product functionality and investment offerings we prioritise, to the insights and research we bring together to support clients to build their businesses.
We place a big emphasis on ensuring our solutions are flexible, to suit the varying and changing needs of firms and their clients.
We know that time and cost efficiencies remain a top priority and challenge for the industry. Macquarie’s recent national survey of small and mid-tier accounting and financial services firms supported this view, and found 41 per cent of firms feel integrating technology into their operations is a key challenge and are determined to better use it to boost efficiency.
Portfolio growth and diversification
The accounting and financial services report found the most profitable practices believe that success is driven by adding value to clients, retaining valuable staff and critically, by improving efficiencies — which, in turn, gives them more time to focus on continuous improvement in the value chain.
Access to a wider and more extensive range of investment options is another key benefit of wrap platforms, whether it’s managed funds, separately managed accounts or domestic ASX-listed securities.
Investors looking for a diversified portfolio and cost effective access to offshore stocks are increasingly using wrap platforms due to the choice they provide, with greater access to new asset classes, sitting alongside their existing domestic portfolio.
This is a prudent diversification strategy, giving investors access to new growth opportunities and a chance to expand their portfolio.
Wrap platforms to continue to play leading role
The changing nature of the market and regulatory environment means advisers and clients alike are increasingly looking for the administration benefits and flexibility wrap platforms can offer.
Wrap platforms have the flexibility to accommodate choice for both advisers and their clients. Advisers can provide advice that matches the needs of clients, while also offering investors easier access to advice.
When discussing investment options with clients, advisers are often asked about the reasons why they should be managing their money through a wrap platform, rather than using self-directed alternatives.
Ultimately, wrap platforms provide advisers with a robust and secure framework through which they can manage client investments and execute their agreed strategy, while freeing up their time so they can keep their focus on providing the quality advice their clients rely on.
I believe that if wrap platforms adapt and innovate, they will ensure both the needs and interests of investors and advisers will continue to be anticipated and delivered on. If the fundamentals of wrap platforms stay the same as they have always been, they will continue to play a leading investment role going forward.
Cameron Garrett is the head of wealth product for Macquarie Wealth Management.
