Getting underneath wraps

Purchase driven behaviour

There are three core groups of IFA display-distinctive wrap purchase behaviour. It is important for both the IFA and wrap provider to work out which group they fall into, in order to learn who they are providing to and what they get from the relationship. The groups are:

The Independents - these are strongly driven by a need to feel independent and that they are their own boss. They are passionate about their client relationships and tend to have fewer clients than the other segments, yet meet with a greater proportion of clients face-to-face and more frequently.

The downside of over-service is this segment often take calls out of hours from clients and find it difficult to relax on weekends. This segment also tends to struggle in taking the next big leap with their business.

Brand Conscious - these are strongly driven by brand and remuneration. They tend to be less loyal than the other segments and have a tendency to feel unloved as advisers by their providers compared with their counterparts in the industry. This group on average has a larger proportion of clients, however one-third tend to be more transactional clients.

Support Seekers - these are strongly driven by a need for pro-active support from their dealer, along with a broader cultural need of being involved with the dealer and other advisers in a given network. Being an adviser is more than money to this segment but part of a state of mind.

What is interesting about this for the industry is that the independents are often the first to adopt a wrap. They typically choose the smaller wraps, which have the ability to market themselves as 'pure' and add to the adviser's halo of independence. But this group tends to represent less than 25 per cent of the industry in number and about 10 per cent of the industry in assets under management and are, because of their tendency to be smaller and less well-resourced, difficult to manage.

In contrast to the independents, the support seekers and the brand-conscious tend to go with the larger brands and follow companies that they find it easy to do business with and get support from. As a consequence, these groups are often a more attractive area for wraps and platforms to target, as they tend to require less effort to manage and they will adopt the systems which make them good partners.

The UK wrap market is at an early stage of development and we can expect to see many twists and turns in the future if the Australian experience is anything to go by. For wrap manufacturers, embedding wraps at the heart of the advisers' businesses and making them viable will be a constant challenge. But as the alternative is to give way to the competition, we can expect to see advisers and wrap providers continuing to work on making wraps a long-term success in the UK.

Andrew Inwood is a founder and principal of CoreData Research UK