Merrill Lynch Investment Managers and Schroders are looking at the feasibility of giving up being Pe...
Merrill Lynch Investment Managers and Schroders are looking at the feasibility of giving up being Pep and Isa plan managers.
This would mean their funds could still be put into an Isa or Pep but the wrapper would be provided by a third party, probably a funds supermarket such as Cofunds or Skandia.
Merrills confirmed it has been in discussions with a number of supermarket groups on the possibility of moving its wrapped business across but said no decision has been made as yet.
Both groups stressed that outsourcing their Isa and Pep book is only one of the various measures under consideration to strip out costs.
Former head of investment sales at Skandia Angus Duncan said while it made sense for groups to offer their own Isa and Pep wrappers in the bull market, the costs of doing so may persuade smaller players into offloading this part of their business in more difficult conditions.
'It comes down to exactly what investment companies want to be, product manufacturers and money managers or product distributors,' he said.
'In my view, offering Isa and Pep wrappers is not part of an asset manager's core proposition, especially among the smaller players and it makes economic sense for them to outsource this part of the business to platforms. Groups will still be managing the money without having to provide the wrapper.'
Duncan added such strategic partnerships with supermarkets are likely to become even more valuable in light of the impending introduction of multi-ties.
Franklin Templeton announced its withdrawal from the Isa and Pep market earlier this year, with investors in its funds via Peps and Isas being given the choice of finding an alternative plan manager or having their investments encashed.
Credit Suisse, Threadneedle and M&G all consider Isa provision as part of their core business and believe Isa volumes have reached such levels that there would be little saving to be had by outsourcing.
Communications director at Threadneedle Richard Eats said that while 80% of Threadneedle's Isa business came through platforms in the last Isa season, the remaining 20% was enough to justify the group continuing to provide its own wrappers. He added that Isa money also has good persistency rates.
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