I’ve just worked out why wrap rhymes with crap

I had an interesting meeting yesterday with a fellow who has accumulated over £4bn on an investment platform within a few years. The money comes from high net worth individuals who invest in funds.

The service he provides allows IFAs to organise their client’s affairs using “wraps”.  It seems the value of the service lies in the technology that brings together disparate investments using multiple “tax wrappers” with a single “portal”.

I really like the bloke and don’t blame him at all for seizing his chance to make himself extremely rich. He is improving the lot of the IFA and simplifying marketing for fund managers but he neither pretends to be or is involved in the provision of “corporate pension solutions”.

This morning I read that Ascentric – (a wrap provider) and Standard Life- Britain’s #1 DC provider are in agreement  that plans for pension wraps can be put back because of delays in the staging of auto-enrolment.

I have no idea why firms like Standard Life and Ascentric are talking about corporate wrap as a means of delivering pensions through auto-enrolment. Just what have  portals and delivery platforms got to do with sorting out the retirements of those for whom auto-enrolment is targeted? For cying out loud, most of them don’t even pay tax!

I’m amazed that auto-enrolment has been filed under “distribution” by the life companies and that IFAs reckon there is an opportunity for them to build businesses through wrapping the pension savings of low earners working for disinterested employers.

This is woolly headed if not plain stupid!

A couple of years ago, I was part of a team looking at strategy for a large consultancy which had run out of ideas for making money out of pensions. I came out with the strapline “portals for show and platforms for dough” which didn’t  get any “traction” , probably because it was accurate and cynical in equal measure.

The corporate wrap is simply an extension of the personal wrap but operates on the same principle. Assets are driven onto a common trading platform and can be viewed via a portal. Theoretically this adds value to the employer who is able to “enjoy” a single view of the benefits offered to staff. In practice the company’s involvement is little more than a means for corporate advisers to distribute on a wholesale basis.

What all this has got to do with improving people’s lives is beyond me. The whole business seems a self-serving exercise designed to keep fund managers , IFAs and technology geeks in a living. The extra value accruing from portal or platform seems minimal while the fees charged for the service are exorbitant (once you have pealed the onion to its core).

IF this is the “model” for the  “new model adviser” and I’m far from convinced.

At a time when serious people are looking to drive down the costs of financial services and create products that deliver decent outcomes for people currently outisde the financial services loop, why do so many organisations spend their time finding ever more complicated ways of extracting value from ordinary people’s savings?

Wrap and Crap don’t rhyme for nothing.

About henry tapper

Founder of the Pension PlayPen,, partner of Stella, father of Olly . I am the Pension Plowman
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4 Responses to I’ve just worked out why wrap rhymes with crap

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