The UK Wrap Market Where are we now?

Publication Date	November 2006
Publisher	Datamonitor
Product Type	Report
Pages	61
ISBN Number	not applicable
Product Code	DAT04515

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Summary

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

Content

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