Adviser feedback 01/04/1999

Do you offer a wrap service? Why/why not?

No. We don't offer a wrap service to clients. The reason is that most of our clients aren't direct share investors. Our client base is predominantly made up of retirees, although this is not to say that retirees don't invest in direct shares.

Wrap accounts haven't been taken up as enthusiastically as masterfunds have in the past. We're taking a wait and see attitude to wraps.

Interestingly, we haven't had requests to date from clients wanting wrap services. I think wrap accounts are perhaps the result of a supplier push rather than users' demand.

Peter Dunn, director, Moneyplan Australia (MP), Melbourne

No, but I'm looking into them. I want to get to the bottom of what the real advantages of wraps are and their real cost structure. I also want to determine what investments can be incorporated into a wrap account.

There are a couple of wrap accounts in the market place at the moment, though I'd question whether or not they would offer real savings for my clients.

At the moment, wraps are being mooted as the next big thing, but what is happening with wraps overseas and what will develop here may be different things. Look at index funds, as an example.

Howard Jacob, authorised representative, Financial Wisdom, Adelaide

No. At this point in time we don't use them, although there may be a place in some people's portfolios for them. We try to get our own computer systems and our own back office to service our clients appropriately.

That's not to say that wrap accounts are not good in other areas, but at this stage we do use a number of master trusts instead when consolidated reporting needs to be done.

But I'm still waiting on the fence to see where wrap accounts definitely add value. That's one of the reasons we haven't used them to date.

Laura Menschik, managing director, Millennium Financial Services, Sydney

No. But we obviously provide clients with an extensive report on a quarterly or half-yearly basis, although this is not provided at this stage by a wrap facility.

We have made a decision to use a wrap account facility in our practise. At the moment, we are still in the process of consulting on this. We are evaluating a number of options available in the marketplace.

Max Weston, director in private business, KPMG, Sydney

Today we don't, but we have just set up a new computer system and we're going down that route. Hopefully in the new financial year we will be in a position to start offering wrap services to our clients.

Most wrap vendors think that I'm a critic, but I do think wrap accounts have a role, but not on their own. Wraps need to be integrated with an adviser's business.

I'm a bit on both sides. Wrap accounts can't do a fraction of what their promoters claim, but there are three factors I have considered in working to offer my clients wrap services.

Firstly, wraps get my clients into wholesale investments, rather than retail, which gives my clients an extra 1 per cent on their returns and thus saves them money.

Secondly, because the client's assets are in the name of a custodian, there is enormous efficiency in paperwork.

Lastly, wraps can deal with any kind of asset. What our system will do is work with clients with a nil RCV annuity or a wholesale unit rust or direct shares - master trusts tend to me more restrictive.

Robert Keavney, managing director, Investor Security Group, Sydney