A ‘big bang' effect in the wrap arena may take up to five years to materialise for the industry as a whole, says Standard Life.
However, within that time-frame wrap is likely to become one of the biggest business lines in the Standard Life group, says marketing director, John Taylor.
Compulsory long-term savings are unlikely to have an impact in this sense, he says, because wrap is more likely to be seen as a tool for use with higher end clients.
Intermediaries this year have been moving closer to wrap, with an increasing number reviewing business models in light of what should be made possible by way of service levels to clients and service levels from providers, he says.
Standard Life – which will launch a wrap proposition “around the end of the year” – intends to leverage such business model decisions.
The provider intends to differentiate from wrap competition by not only holding seminars or offering training sessions to IFAs picking its offer, but by also looking to lend a helping hand in dealing with business management issues that will follow changes to business models.
Because the economics of distribution are changed by wrap, business models must change too – and providers will have to ensure their service levels match the promises made as to the potential benefits, Taylor says.
Standard Life fully intends to ensure its service level reputation is extended to the wrap proposition, he adds. Providers will have to think about their future in this regard, including whether market demand will see IFAs simply switch clients away from those not meeting the wrap service levels required – such as access to data on underlying holdings within funds.
Understanding and comparing service levels between wrap platform providers and how to go about migrating business to web-centric business models are some of the factors stopping an industry-wide wholesale shift, Taylor suggests.
And he adds, Longer-term, it is likely consolidation in the wrap market will see four or five dominant players.
If you have any comments you would like to add to this story or would like to speak to its author about a similar subject, telephone Jonathan Boyd on 020 7484 9769 or email [email protected].IFAonline
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