December 2007
WRAP REVOLUTION IS IN FULL SWING
The use of wraps is fast changing the face of the financial planning sector, giving planners and clients alike instant access to their portfolio. Here Bill Saunders, head of financial planning at The Acumen Group gives an insight into this burgeoning area.
In the movie business, when they say 'it's a wrap' they mean a job well done. This statement is also true of wrap services, a product that is revolutionising the financial planning sector.
The use of wraps is central to the way forward thinking financial planning is changing. Rather than adopting the traditional product sales approach, wraps allow planners to base their advice on what works for the client, rather than for commission.
A wrap service is a web based administration system that enables a financial planner to hold all of a client's investments on one platform. Transact was the first wrap service to be launched in the UK and Acumen Financial Planning was the first company in Aberdeen and one of the first in Scotland to use the pioneering product in 2002.
The service fulfils two functions. It provides a dealing service that buys, sells or holds a wide variety of investments including unit trusts, investment trusts, shares and cash deposits.
It also provides all the appropriate tax wrappers (such as a PEP, an ISA, pension or insurance bond) that a planner might wish to use to benefit the investor. Clients and their advisers have online access to their portfolios at any time, providing up to date valuations as well as a history of all transactions that have occurred since it was opened.
Acumen's early lead in this field has been followed by many other advisers - indeed over 2200 now use Transact on behalf of 60,000 clients who between them hold £4.7 billion on the platform.
Since Transact was launched, and the wrap concept was seen to be so important in helping financial planners streamline the service they provided, many household names in the financial sector have now launched their own versions of a wrap service such as Standard Life, James Hay and Raymond James Investment Services. But, Transact has no ties with any insurance company, fund manager or bank and this independence is seen by many financial planners as one of its great strengths.
So why does Acumen use Transact? Well, we are one of the lucky ones in that we discovered wraps early on in the development of our business.
We knew then that there had to be a better way to administer our clients' investments than dealing with individual investment houses on individual holdings for individual clients. Because we have been using wraps for quite a while, it is true to say that there wasn't a great deal of choice in the market at the time. That said, we certainly don't regret choosing Transact.
Imagine if you will, the eureka moment at our first exploratory meeting when we realised it was possible to have a business partner who would do all the back office stuff, negotiate terms with fund managers, accept portfolio transfers from stockbrokers, track capital gains, put all the transaction history on a secure website for us and our clients to see, provide a dedicated team leader to deal with our cases when volumes rose, give us one income statement per quarter analysed by planner by client, provide tax summaries at the end of every tax year and lots more.
We knew then we could take on discerning clients and provide a truly professional level of service.
Transact has grown substantially over the years, but the fundamentals we liked at the time are still there: they are independent of product providers and fund managers; the functionality is good and the terms negotiated with fund managers are excellent. No doubt new entrants will come into the market that can compete with the second two points but the independent nature of the current service fits perfectly with Acumen's business ethos.
Bill Saunders can be contacted at bill.saunders@acumen.info
