Wrap accounts or managed account providers

GeoH_2

I am presently in a Transact wrap account.
Is this a worthwhile account or is it an expensive luxury.
I have been informed that the discount that they get can on funds etc. can actually eventually pay for it if you have enough invested in the wrap account?

Could the information provided by the wrap account not be generated by a free portfolio builder on some of the investment sites? Giving you real time values.

Surely IFA’s have readily available software that can give you real time values albeit not readily available to the client via on line access.

How does the wrap account and its costs added to the IFA’s costs compare with some of the management services provided by the likes of HL and Best invest for example.

dunstonh

Posted a bit of this on your other thread:

Wraps are a total waste of money. Any IFA worth their salt is going to be operating software that can act as a wrap at that level. There is no point paying again for the something the IFA can offer free of charge. Of course, if the IFA doesnt operate software that can do the job, then passing the cost onto the client by getting them to pay for the "wrap" is one way of doing it. If you have shares, investment trusts, unit trusts, bonds etc then there could be an arguement for it if you wish to transact yourself but if you are just using unit trust/OEICs then a fund supermarket is fine. (note that IFA software can output info on those all on one statement as well but you cannot transact yourself within the IFA software)

To be fair, the industry is split on its views on wraps. Some think they are the best thing since sliced bread, some (like me, and the other IFAs that contribute here based on past comments) think they are overated and unnecessary and that the fund supermarkets can do the job required and the IFA can use their software to do the rest.

Transact can actually be quite cheap if you have large value assets with them (or family linked as their charges reduce the more value all linked family members have with them. Not joint money but if 5 family members invest 50k with them, they can charges and terms based on £250k).

Another way of putting it is that you have bought a top of range provider/product. Lets pretend its a Ferrari. However, you are probably only going to drive it at 10mph making it really a waste of money. Thats the position you are in with the wrap.

EdInvestor

GeoH wrote:

expensive luxury.

Yep.

Could the information provided by the wrap account not be generated by a free portfolio builder on some of the investment sites? Giving you real time values.

Yes. But why not have a proper discount broker account eg at
Hargreaves Lansdown
https://www.h-l.co.uk

or Selftrade
https://www.selftrade.co.uk

You will get charges rebated as well and this will help a lot.Funds are only valued once a day so "real time" is pretty meaningless..

How does the wrap account and its costs added to the IFA’s costs compare with some of the management services provided by the likes of HL and Best invest for example.

They make everything much more expensive.Wraps are just a reinvention of a wheel belonging to the stockbroking fraternity which has been around for years and can now be obtained bvery cheaply.

dunstonh

Any luxury is expensive but that doesnt mean you shouldnt buy it. You should just buy it if you want it. If it adds value then its worth it. If it doesnt, then its not.

HL cannot and does not provide wrap features at IFA level. Nor can self trade.

EdInvestor

What kind of wrap features do you mean?

Real time prices are certainly provided at Selftrade for shares and ITs and ETFs - they doesn't really exist for funds, they are only valued once a day IIRC.

You can have all your accounts there - ISAs, Sipps Peps CTFs and dealing accounts.There's a cash account plus all the transaction documentation.

Also many research tools, charts etc.

Chrismaths

You can't have the administration of your SIPP done by Selftrade, you can only do the dealing for a 3rd party SIPP at Selftrade. Transact's pensions also offers the full range of pension features, such as S32s etc. They also offer more wrappers than Selftrade (for example offshore bonds). The point of a wrap is that everything is done in one place - including the wrapper. With Selftrade, you have to have a 3rd party administrator (like sippdeal). If you have things administered by an IFA - it also makes it possible for him to see in real time what is going on with your entire finances, which enables him to provide a higher level of service.

Whether you want to pay the extra for the convenience/facilities is up to you, personally I wouldn't.

GeoH_2

EdInvestor wrote:

Yep.

Yes. But why not have a proper discount broker account eg at
Hargreaves Lansdown
https://www.h-l.co.uk

or Selftrade
https://www.selftrade.co.uk

You will get charges rebated as well and this will help a lot.Funds are only valued once a day so "real time" is pretty meaningless..

##########

Do you mean ?

HL Vantage Account
or
Portfolio Management service
or neither

EdInvestor

Chrismaths wrote:

You can't have the administration of your SIPP done by Selftrade, you can only do the dealing for a 3rd party SIPP at Selftrade.

True, but in effect the only Sipp "admin" you would ever look at more than once a year is the valuation, which you can see on the Selftrade dealing screen anyway.[Online Sipps are anyway very simple to use as well IME.]

Transact's pensions also offers the full range of pension features, such as S32s etc. They also offer more wrappers than Selftrade (for example offshore bonds).

Ah. One for (some of) the IFAs then, really. Since you probably wouldn't want to buy these expensive and inflexible extra wrappers, then you probably wouldn't need the additional outer layer to put them in.

EdInvestor

GeoH wrote:

Do you mean ?

HL Vantage Account
or
Portfolio Management service
or neither

I mean the Vantageaccount.
which is the same kind of "wrap" arrangment, where all your investments are listed on the screen in one spot.This is the DIY "discount broker" route which saves you money.

The Portfolio Management service is an investment advisory service,where you let them manage your investments for which they charge you a fee.

dunstonh

True, but in effect the only Sipp "admin" you would ever look at more than once a year is the valuation, which you can see on the Selftrade dealing screen anyway.[Online Sipps are anyway very simple to use as well IME.]

Transact is geared towards the larger investor. They are looking at the £250k plus individual who wants closer managment and reporting.

The more you have, the more work and monitoring it takes. Also, the more likely you are to utilise different tax wrappers.

Ah. One for (some of) the IFAs then, really. Since you probably wouldn't want to buy these expensive and inflexible extra wrappers, then you probably wouldn't need the additional outer layer to put them in.

You may not but there are plenty of people out there that do. A S32, for example, isnt any more inflexible than other pension wrappers. Someone suffering a potential lifetime allowance issue pre A day could have saved tens/hundreds of thousands of pounds utilising a S32. Thats just one example.

EdInvestor

Transact is geared towards the larger investor. They are looking at the £250k plus individual who wants closer managment and reporting.The more you have, the more work and monitoring it takes. Also, the more likely you are to utilise different tax wrappers.

Strangely I don't find this personally Keep it simple is the way to go IMHO.