Wraps surge in popularity
Wrap accounts and master trusts continue to eat into the market share of traditional retail funds, despite recent dire predictions for the future of portfolio management services.
Wrap accounts and master trusts continue to eat into the market share of traditional retail funds, despite recent dire predictions for the future of portfolio management services.
Wrap accounts are now used by nearly a third of all financial planners, compared to only one in eight a year ago, according to the Assirt Market Trends survey. However, Assirt managing director Brett Sanders says that while the proportion of advisers using wraps has skyrocketed, funds in wrap accounts still only accounts for about 6 per cent of funds under advice.
“Actual business placed is still relatively low, however, indicating that advisers may be testing the administrative performance of wrap accounts before commit-ting,” he says.
Master trusts are now used by the overwhelming majority of planners, with 79 per cent now using master trusts for at least some of their clients. Some planners have stopped using traditional retail products altogether. The proportion of advisers us-ing retail funds has dropped from 95 per cent at the end of 1998 to 90 per cent at the end of 1999.
The massive jump in the use of wrap accounts by financial planners corresponds to increased awareness of wrap accounts by advisers. More than half of advisers now know a lot or a fair amount about wrap accounts, compared to 22 per cent at the end of 1998.
Recommended for you
ASIC has released the results of its first adviser exam to be held in 2025, with 241 candidates attempting the test.
Quarterly Wealth Data analysis has uncovered positive improvements in financial adviser numbers compared with losses in the prior corresponding period.
Holding portfolios that are too complex or personalised can be a detractor for acquirers of financial advice firms as they require too much effort to maintain post-acquisition.
As the financial advice profession continues to wait on further DBFO legislation, industry commentators have encouraged advisers to act now in driving practice efficiency.
