I often get asked by our clients, why we use a particular wrap platform (wraps) to hold their investments or indeed why we use one at all! The simple answer to this is that wraps have made investing a whole lot more efficient for clients and their professional advisers.
For those of you who are unfamiliar with what a wrap platform (also known as an investment platform) is, it is an account that allows the investor the ability to consolidate and manage all of their investments all in one place, online, for a fee. In almost all cases; the fee charged by the platform outweighs the cost of not using one.
The key advantages of using a wrap for holding client investments are:
- Reduced paperwork – Gone are the days when you had to fill in an application form or write out a cheque each time you wanted to invest money except to initially open an account.
- Less time out of the market – Without the need to send monies back and forth to each different fund provider, fund switches are quick and easy to complete.
- Access to Whole of Market funds – Wraps combine the purchasing power of all of the clients on the platform to allow investors access to funds not previously available. This enables Paradigm Norton to access the world’s best low cost institutional funds, such as Vanguard and Dimensional. As a result, our portfolio costs have reduced substantially over the last 5 years to around 0.3% currently.
- Online access to your portfolio – The ability to view (and value) all of your investments online at anytime and anywhere.
- Tax statement – A wrap platform will provide each investor with a single annual tax statement, documenting all their transactions and related tax information.
In essence, the use of a wrap platform pays for itself in the time it saves (on admin) and reduced investment charges without compromising on portfolio diversification.
A platform also allows the client to delegate more effectively to their professional advisers. As financial planners, the advent of wraps has revolutionised the way we advise clients and interact with other professional advisers and it means we (us and the client) can devote more time focusing on the most important issues such as helping our clients achieve the goals they have articulated rather than spending large amounts of fee based time on intensive administration.
The vast majority of Paradigm Norton’s clients hold their investments on a wrap platform. We carry out an annual due diligence exercise on the wrap platform market in order to ensure that new entrants to the market are duly considered and that the key platforms that we recommend continue to be keenly priced and appropriate for our clients.
RMT Ref 84/11.14/SL