Advisers can’t account for wrap lapse
While the industry has devoted many recent hours locked in grave debate over the future impact of wrap accounts, a new survey has concluded that very few advisers understand wrap accounts.
Research house ASSIRT says its recent Market Trends survey shows advisers have no in-depth knowledge about so-called wrap products, with around 30 per cent of respondents saying they know "nothing at all" about wrap accounts.
Of the 455 advisers surveyed by ASSIRT, almost half said they knew "a little" about wrap accounts, while one in five said they had a fair amount or great deal of knowledge about wraps.
The results may explain the recent proliferation of conferences devoted to wrap accounts.
At one packed conference last week, industry consultant Paul Resnik told his audience that wraps were "redundantly excessive", flying in the face of what he described as consumer demand for simplicity.
"While it all looks exciting, I'm not sure if wraps relate to reality," Resnik said.
Meanwhile, concerns were expressed that wrap accounts are too costly and may fail to deliver the all-encompassing solutions promised by their vendors.
Other bones of contention raised include the costs of implementing and maintaining wrap services and the lack of long term regulatory certainty.
Questions were also raised over the consolidated reporting features which are a key plank in manufacturers' claims.
Investor Security Group managing director Robert Keavney, while maintaining that wrap accounts were "a great step forward", voiced reservations about the impact increased costs would have if passed on to clients. He argued that unless current fee structures in the industry were reviewed, it was possible the industry could face "an enormous cash squeeze" in the near future.
However, according to BT Portfolio Services' business development manager Dan Powell, the costs associated with offering wrap accounts are "no more expensive" than those of any other account". Powell argued that if the market saw any initial hike in fees due to the technology overheads of manufacturers, they would become "more competitive" in the long run.
Recommended for you
Licensing regulation should prioritise consumer outcomes over institutional convenience, according to Assured Support, and the compliance firm has suggested an alternative framework to the “licensed and self-licensed” model.
The chair of the Platinum Capital listed investment company admits the vehicle “is at a crossroads” in its 31-year history, with both L1 Capital and Wilson Asset Management bidding to take over its investment management.
AMP has settled on two court proceedings: one class action which affected superannuation members and a second regarding insurer policies.
With a large group of advisers expecting to exit before the 2026 education deadline, an industry expert shares how these practices can best prepare themselves for sale to compete in a “buyer’s market”.
