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The UK Wrap Market Where Are We Now?

Published by: Datamonitor

Published: Nov. 22, 2006 - 61 Pages


Table of Contents


CHAPTER 1 EXECUTIVE SUMMARY
The Quest for a Pure Wrap proposition
Datamonitor has developed a clear definition for a "pure wrap" proposition
How vital are these features of Wrap?
What is the potential size of the Wrap market?
In 2005, Wrappable assets in the UK reached EUR 2,746bn
Pull factors from the changing structure of the IFA market
Current Wrap propositions
Different types of institution have launched Wrap-style propositions
Fund supermarkets already operate some elements of Wrap
Life and pensions providers have the scale to launch and develop wrap
IFA consortium offers a customer aligned proposition
The future success of players in the UK Wrap Market
Identification of the needs of advisors is crucial
Wrap should be viewed and sold as a new distribution channel rather than as a product
Correct targeting of likely firms - slow and steady
The importance of the pricing structure is the transparency rather than how this transparency is approached
Communicating to IFAs that transition may be hard
Future competitive dynamics within the Wrap market
Where does future competition lie?

CHAPTER 2 INTRODUCTION
What is this report about?
Who is the target reader?
How to use this report


CHAPTER 3 THE QUEST FOR A PURE WRAP PROPOSITION
Introduction
What are Wraps?
Datamonitor has developed a clear definition for a "Pure Wrap" proposition
1. Encompassing all tax regimes
2. Full coverage of all available products and assets
3. Full suite of financial tools
4. Full functionality through an online platform
5. Pricing transparency
How vital are these features of Wrap?

CHAPTER 4 WHAT IS THE POTENTIAL SIZE OF THE UK WRAP MARKET?
Key findings
In 2005, Wrappable assets in the UK reached EUR 2,746bn
Life and pensions assets have driven the growth in Wrappable assets since 2002
Wrappable assets in the UK are forecast to reach EUR 3,859 bn by 2010
Regulatory impacts of pension reform will continue to attract assets onto Wrap platforms
SIPP investments are key to the future growth in value of Wrappable assets
Compulsion or semi-compusion
More transparent life based investments have given a boost to the availability of funds on the platform
Valuation and migration of legacy business has become more efficient
Pricing drivers have pushed inflows into the UK Wrap market
Only a small proportion of the UK IFA market operates on a predominantly fee basis
Trail commission creates a safety blanket for IFAs
Pull factors from the changing structure of the IFA market

CHAPTER 5 CURRENT WRAP PROPOSITIONS
Introduction
Key findings
Different types of institution have launched Wrap propositions
Fund supermarkets already operate some elements of Wrap
Fund supermarket - already offering the most important element of Wraps?
Skandia Multifunds and Selestia - match made in heaven?
Life and pensions providers have the scale to launch and develop wrap
Standard Life - Commited to the development of Wraps
Abbey - leaving the "shackles" of the parent company behind
IFA consortium offers a customer aligned proposition

CHAPTER 6 THE FUTURE SUCCESS OF PLAYERS IN THE UK WRAP MARKET
Introduction
Key findings
How to launch a successful Wrap proposition
Identification of the needs of advisors is crucial
The problem for future market development may be having too many propositions aiming at the high end
Those who are providing an evolution to Wrap are most likely to provide these services well
Wrap should be viewed and sold as a new distribution channel rather than as a product
Correct targeting of likely firms - slow and steady
The importance of the pricing structure is the transparency rather than how this transparancy is approached
Full advantage of Wrap is through placing legacy business on the platform as well as new business
Life Company Wrap providers -White labelling or own brand?
Communicating to IFAs that transition may be hard
Future competitive dynamics within the Wrap market
Potential for consolidation amongst Wrap providers
Use of two or more platforms
Concerns that the Wrap market is anti-competitive
Where does future competition lie?
Potential for Banks to enter the Wrap market
Life companies going head to head with very similar offerings
Entry from Australian markets

CHAPTER 7 APPENDIX
Supplementary data
Definitions
New business
Wrap accounts
Life based savings products
Life Product Definitions
Life Assurance
Single Premium Life
With-profit bond
Guaranteed Equity bonds
Distribution bonds
Purchased Life Annuities
Other bonds
Annual Premium Life
Endowment Policy
Term Assurance
Income Protection
Critical Illness
Collective Life
ISAs
Pension product definitions
Personal Pensions
Stakeholder Pensions
Group personal pensions
SIPPs (Self Invested Personal Pensions)
Further readings
Savings and Investments SPP
Interactive Databases
Reports
Briefs
Life and Pensions SPP
Interactive Databases
Reports and Briefs
Financial Advice Market SPP
SPP writing team
How to contact experts in your industry


List of Tables
Table 1: Total "Wrappable" assets in the UK investment market 2001-2005
Table 2: Total "Wrappable" assets in the UK investment market 2006-2010
Table 3: % of IFAs operating a percentage of fee-based business


List of Figures
Figure 1: The 'holy grail' of wrap services incorporates five key elements, 2004
Figure 2: Life and pensions assets are the largest class of "Wrappable" assets in the market
Figure 3: Life and pensions assets will remain the largest section of the UK Wrappable assets market
Figure 4: A huge increase in SIPP business is forecast between 2006 and 2010
Figure 5: Sales of with-profits products have collapsed since 2001
Figure 6: How do you store data relating to your business?
Figure 7: There has been a shift towards offering fee based business, although levels are still low
Figure 8: The capitalized value of IFA firms is far below that of product manufacturers

Abstract

Introduction

This report looks at the current size of the Wrap market, opportunities that remain and the potential for entrants over the coming years. It profiles the leading competitors. Wrap accounts are one of the current buzz words of the UK financial services market in 2006, however the definition of a "pure wrap" is hard to pin down and the question remains, is a full wrap necessary for all clients.

Scope
  • The report sizes and forecasts the value of Wrappable assets in the UK market to 2010, identifying the key drivers in the growth of the market
  • It profiles the key emerging models in the UK Wrap market examining their key advantages and how they stand out from other models
  • It identifies the best strategies for selling the Wrap model to IFAs and how to best promote this new business model to advisors
Highlights

In 2005, Wrappable assets in the UK reached EUR 2,746bn. Life and pensions assets have driven the growth in Wrappable assets since 2002. A key driver of the future growth of Wrappable assets will be the regulatory impact of A-day and the advantages Wrap providers take from this.

There have been a number of high profile launches of Wrap propositions by life and pensions providers. These companies have the experience of providing the tax wrappers and have the relationship with advisors, however often do not have the required level of confidence in their asset management skill and the available range of funds.

Datamonitor has identified that most providers who are successfully entering the market are perceiving and selling Wrap as a new distribution business model rather than simply a product or piece of technology.

Reasons to Purchase
  • Identify the value of the UK Wrap market and see how the value of Wrappable assets are forecast to grow to 2010
  • Profiles the key competitors in the UK market and how they have developed their proposition.
  • Assesses where the key opportunities lie for Wrap providers going forward and where are the main areas of competition will lie


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