Platforms

Although possibly one of the most confusing terms bandied around the financial services industry, wrap is essentially just a way of providing a 'personal balance sheet' to a customer- the single view of all their investments from multiple providers and sources.

It sounds easy enough in practice but the realities of delivering these services in the UK market are challenging, involving large technical spends and complex operational platforms, taking into account the numerous tax wrappers and legacy products. 2008 has seen new propositions come to market including Novia and AXA's Elevate. Fidelity Funds Network, Cofunds and Skandia continue to dominate. Abbey's troubled James Hay has gone quiet and Aviva's Lifetime has been outsourced to Scottish Friendly with an initial investment of over £84 million written off. Friends Provident canned their plans to build a wrap – so it's not all positive news even though the market is growing apace.

Across Europe, fund platforms tend to require less complex tax wrappers and also service a much less fragmented distribution base, given the largely dominant banks (as opposed to the thousands of IFAs servicing the UK). An interesting emerging trend is the inclusion of investment consulting and sometimes asset management services by the platforms themselves – blurring the boundaries and challenging the role of the traditional manufacturers. A very different approach and strategy is needed in European markets and cross-border attempts require appropriate customisations – different products, cut-off times, distribution reporting and languages are some of the many issues to solve. As always, the major factor in any such solution is Operations and IT and very often the cost base of running such platforms is hugely underestimated, making break-even a painful and distant dream.

Holly's financial services career started in the Australian market in 1998 where she became involved with the (then) emerging wrap platforms, a structure which is now a key part of fund distribution in most countries. On her return to the UK in 2003 she worked as a consultant to the emerging wrap participants prior to joining Grupo Santander, where she was most recently UK Director of their €36 billion fund platform, Allfunds Bank. Although leaving many wounded in its wake, the rollout of fund platforms continues even in troubled markets. Total fund platform assets have risen from £64bn as at Q107 to an estimated £94bn as at Q308, even though stock markets are some 40% off their peak.

In-house wrap and platform experience:

AXA Australia (Summit), Norwich Union Australia (Navigator), Merrill Lynch Australia (Portfolio Choice), Grupo Santander UK (Abbey Wrap and Allfunds Bank).

Who can we help?