Effective administration is vital to every business; however, advisers are only too aware that effective administration can make all the difference to the success of their client relationships.

With this in mind, it is worth taking a look at wrap platforms.

A wrap platform is an online administrative operation that helps to perform the administrative function carried out by the financial adviser. Instead of holding different investments with different fund management houses, investors can buy, sell and manage a range of investments and funds through a single centralized service. A fully comprehensive wrap platform can reap significant benefits for advisers as well as their clients, as it can help to control costs, reduce the amount of time spent on administration and allow advisers to manage their clients’ portfolios more efficiently.

An element of controversy currently surrounds wrap platforms – in particular, the Financial Services Authority has highlighted what it believes to be a lack of clarity over what constitutes a true wrap platform. Moreover, the regulator believes that, in order to act in their clients’ best interests, advisers are obliged to consider all product types, which might lead them to use another platform or to invest off-platform.

Of course, different customers require different products and services, so it is vital advisers choose the most appropriate wrap platform for their business.

Wrap platforms are not suitable for clients with small amounts of AUM, low tolerance to risk, clients who don’t want an ongoing relationship with their adviser or who are investing short-term.

April 2012