Wrap Platforms in the United Kingdom
Wrap platforms are changing the way UK insurance firms are able to distribute their products and will raise a number of challenges for IT departments.
Wrap platforms will be key in the evolution of the distribution of financial services and products. Wealth management has already been transformed by these platforms in the US and Australia, and it is now the UK's time to catch up. The impact of depolarisation, regulation of independent financial advisors (IFAs), and changing consumer attitudes are all factors that ensure this is a solution chasing a problem.
In a new report from Celent, : An Insurer Perspective, Celent provides an overview on wrap platforms and the insurance perspective. Conditions are in place for the wrap market to continue to develop with more wrap providers entering, and current providers extending and broadening their offerings.
"A wrap platform is not a product in itself," says Catherine Stagg-Macey, senior analyst and author of the report, "but rather an enabling technology. Wrap platforms are about a financial relationship between end customers, their IFA, and the product manufacturer." Wraps are a Web-based portfolio administration service. Ms. Stagg-Macey notes that there are there are benefits for all parties involved in the wrap platform. "The customer gets a consolidated view of the portfolio, with access to a wide range of funds, often at wholesale prices. The IFA benefits from the considerable efficiency to be had by viewing client portfolios in a single place. The product manufacturer benefits from lower costs in distribution."
The objective of the report is to provide some insight into this nascent UK wrap market for insurers. UK insurers are playing a key role in this growth. The report discusses definitions, benefits, and the ways players are choosing wrap strategies. It discusses some considerations for the business case and some of the IT challenges raised by such a project. The final section reviews some of the possible changes to the distribution channel, and the report concludes with some key pointers for insurers considering this market.
The 22-page report contains three figures and two tables. A table of contents is available online.
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