There are numerous reasons for the success of badged or ‘white label’ wraps, but none more significant than the benefits of scale they offer both the platform providers and their client dealer groups.
Providers get to utilise the spare operating capacity existing in their branded wrap products, creating an additional distribution source as well as reinforcing their position in the marketplace.
Dealer groups get to unlock a valuable additional source of revenue and also extending their brand awareness.
Mitchell Sinclair, head of distribution for BT Financial Group, says administering wraps and platforms always comes back to a question of scale, and badged products are no different in this regard. I don’t know if a platform provider is going to get sufficient scale in the marketplace if they are only pushing their own internal brand.
He adds that scale is not just about how much money you have on the platform, but also about the intelligence you can get in the marketplace from having clients actually sit at the product development table.
If you were to solely develop and maintain a platform under your own name and not in partnership with other groups, your offering is not going to be as good as it could be, explains Mitchell.
Sinclair considers badged wraps and platforms a mutually beneficial partnership between providers and dealer groups, rather than solely a means of distributing product.
Dealer groups who badge want to have an involvement in how the product will look, so it’s not just about taking your product off the shelf and just white labelling it.
It’s about taking the time to understand what dealers groups are looking to offer their clients through the badge wrap, and in so doing actually developing your own wrap product.
Sinclair says demand for BT’s product was coming from groups who see us as a market leader in wrap administration and want to have BT Wrap (and Wrap Essentials) as part of their proposition.
There are now about 60 dealer groups in Australia that use a badged wrap or platform, with BT and Macquarie the largest providers. BT Financial Group offers 45 badged wraps, managing about $17 billion in funds, including through advisory groups such as Tynan McKenzie, DKN and Count.
Doug Chang, head of product for Macquarie Wrap, says dealers groups are making selection decisions based on the overall reliability and functionality of the platform provider offerings.
Price is one of the selection options out there at present — although by no means the only one — and I think the service proposition needs to be very strong as well, Chang says.
Robyn Mohr, Count Financial’s senior executive — product and membership development, says the group’s criteria for a badged wrap is competitiveness with the available master trusts and the public offer funds.
Count currently offers six different platforms to clients, including two badged wraps through BT Financial Group — namely Wealth-e-account, its mainstream wrap, and a platform for high nets called platform2.
Chang adds that the level of flexibility and control to customise certain parts of the product to meet specific needs — for instance, the way fees are calculated — are other key motivators for dealer groups.
It’s not just about getting the groups on board, but how you look after them once they are on board, because you are typically entering a long-term agreement.
