Corporate wrap needs to be renamed, as it is developing into something completely different to individual wrap, says Ian McKenna, director of the Financial Technology Research Centre
Over the last decade there have been endless debates in the individual market about what a wrap is. I find such discussions pointless. Is it not more important to match customer needs to a service, rather than spend hours debating what the service should be called? I say this as I hope the corporate market can avoid an equally pointless debate about what to call many of the solutions being delivered to help scheme members get a better understanding of their finances.
This is important for two reasons. Having spent considerable time in recent months looking at the different
packages from leading EBCs and the plans of what is being built by a number of life offices, it is increasingly obvious to me that what is being built is not a corporate version of wrap, but services that are far more valuable in addressing key issues, such as growing financial capability and helping workers take better control of their finances.
In the individual market wraps can undoubtedly make it easier for advisers to make sure their clients investments reflect their attitude to risk and
that the right assets sit in the right tax wrapper. For the most part however consumers who have assets invested in wraps are likely to have considerably more complex financial affairs than the average member of a group pension scheme. The latter group need to have services which can help them better understand their finances and I believe it is this, rather than access to a vast range of investment funds, that will deliver a significant increase in the value and benefit of services from corporate advisers.
Right now the corporate sector is evolving rapidly and many of the traditional alliances of the past are being put aside with the increasing emergence of the concept of co-opertition. The nearest analogy I can draw is the relationship in the mobile phone market between Apple and Google. Eighteen months ago the two were active partners, with Google providing search and map support for the iPhone. Today Google still provides these services but it also has the Android operating system which is frequently touted as an iPhone killer and probably the best alternative to Apple’s smart phone. In the same way I am seeing increasing numbers of benefit consultants launch their own services capable of delivering much of the client facing technology that only a few years ago was pretty much the exclusive preserve of the life office community.
The pension products being offered on these platforms are predominantly from the same life offices but, in the battle over who owns the client, increasing numbers of benefit firms are recognising the need for their own customer facing proposition.
The FSA has recently coined the phrase ’platform operators’ as a collective definition for organisations operating in the wrap and platform space. Following their lead I think it would be better for organisations building new services to describe them as ’benefitplatforms’ rather than corporate wraps.
Just as in the individual market, we are seeing advice firms taking ownership of an increasing part of the value chain by instigating their own investment committees to manage much of the work previously undertaken exclusively by the product provider or fund manager.
So increasing numbers of corporate firms want to position themselves as owning the front end service which the employer and their staff see day to day. Presently Staffcare offer the only truly independent option in this space, but whilst it has much to offer I still believe it is a couple of key elements short of the compete offering. So adviser firms do need to examine partnering with life offices but with only a few providers having actually launched their new service it is too early for firms to choose their partners.
Right now the corporate sector is evolving rapidly and many of the traditional alliances of the past are being put aside with the increasing emergence of the concept of co-opertition
The market is becoming confusing for both smaller corporate firms who lack the resources to build their own dedicated platforms and employers
who now appear to have to choose between the propositions of EBCs and other benefit advisers as well as the direct offerings of an increasing numbers of life offices.
To help advisers and employers understand their options F&TRC is currently working on its first e-Excellence study to benchmark the technology propositions of life offices, benefit consultants and advisers. The results of this work will appear as part of a special supplement with the October issue of Corporate Adviser.
Organisations wishing to be benchmarked as part of this Employee Benefits Platform e-Excellence study should contact email@example.com for information on how to participate.