I had an interesting chat a couple of days ago with IFAonline's own Jennifer Bollen on the threats to wrap providers from IFA back office system providers.
Apparently Anthony Badaloo of Church Hill Finance believes that so-called super wraps (revved up back office systems) will come to eliminate wraps in the near future.
My perspective on this is that the back office system providers have done an immense job in trying to resolve the technology problems created by the UK life and pensions sector (and to some extent various regulators) over the last twenty years but to suggest they are able to function as wrap platforms is absurd.
I see any convergence of technology being driven from the other side. While back office systems are effectively string and sticky tape over and around the problems of the past, wraps are about providing the most efficient environment for IFAs to manage their clients assets (and liabilities) to best effect.
Wrap should be driven by a desire to strengthen the IFA/client relationship and in the case of Nucleus as least to transfer control of the retail market from the life offices into the hands of advisers and their clients.
This can only be achieved by IFAs taking proper control of client assets and wherever possible moving assets away from uncontrollable high margin and often poorly performing life office products into a more modern environment which offers much greater control of asset allocation and selection over a client’s entire portfolio.
This industry will not be fixed by merely aggregating data – IFAs need to be able to aggregate client assets before they market can truly shift.
One last point on the subject, how many back office system providers are truly set up to support the operational, regulatory and governance standards that are required of a wrap provider?
By way of a lighter thought is anyone else enjoying the ABI’s we love them/we hate them twisting and turning on the subject of IFAs. You couldn’t make it up!
David Ferguson is chief executive at Nucleus
The views expressed in this article are those of its author and do not necessarily represent those of IFAonline or any other Incisive Media-affiliated organisation.IFAonline
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