UK - Wrap accounts will administer some £150bn worth of UK assets in five years, new research shows.
A report by Datamonitor reveals that the technique, which enables IFAs to view their investments from the one internet-based platform, will increase in popularity by 40% by 2008.
The flexibility which wraps provide has made them very popular in the US and Australia where they are worth around £400bn and £125bn of assets respectively.
Pension fund valuations, transactions and portfolio rebalancing can all be done from one screen, 24 hours a day – increasing operational efficiency and reducing administration costs.
Datamonitor financial analyst Alan Shields says the speed with which the wrap market develops will depend on the implementation of:
- Ron Sandler’s recommendations on commission bias. - The government’s proposals on pension simplification. - The Financial Services Authority’s depolarisation proposals.
Shields said: “At present, there is a commission bias – banks are only allowed to sell the products of one provider, and pensions products remain complex and unmanufacturable for wrap platform providers.”
He added: “The regulatory changes will enable wrap accounts to remove the reliance on commission by offering a flat fee that is a percentage of assets under management.”
The Pensions and Lifetime Savings Association (PLSA) has announced it will shrink its board by more than one-third as part of a governance overhaul to make it "agile and more appropriate".
Smaller FTSE 350 defined benefit (DB) schemes were nearly 15 percentage points less well-funded than larger schemes in 2017, according to a Goldman Sachs Asset Management (GSAM) analysis.
The advent of collective pension systems could help the UK avoid demographic challenges which will make it "impossible" for society to help savers in retirement, experts say.