What should you do with your pension plans and investment funds if you have acquired a collection of them and want to have a better understanding of what is happening to them and what they might ultimately do for you?
Some advisers might recommend that you transfer your plans onto a “wrap” and you may well be asking yourself “what on earth is a wrap?”
Well put simply a wrap (sometimes they are referred to as “platforms) is simply a piece of technology that stores all of your pension plans and investment funds (ISAs, Unit Trusts, Open Ended Investment Companies, Shares and Insurance Investment Bonds) and allows you to analyse them, buy and sell holdings and project and predict what is likely to emerge from them.
Or if it doesn’t allow you to do this, it allows your financial adviser to do so on your behalf.
In many ways wraps are a really good solution for many of the problems with which consumers are faced. For example, if you have say six different pension plans, equity ISAs and Unit Trusts in your portfolio, that can mean you receive as many as twelve statements each year (together with the accompanying promotional material) from the plan providers. In my experience much of this is of little value to the consumer to the extent that it often remains unopened in the envelope!
Holding the same assets on a wrap platform means you receive consolidated statements and usually can view your portfolio 24/7 from a computer screen of your choice.
Being able to analyse your investment holdings and working out if what you have is good, bad or indifferent is equally as challenging. Holding all these items on one wrap platform that contains analytical tools can make this job much easier.
Buying and selling investments can be a costly exercise. Very often product providers have initial charges that apply so if you sell unit trust x and repurchase unit trust y it can cost you 5% or more. Buying and selling on a wrap platform can cost as little as 0% to 0.25% so some big savings to be made.
Wrap platforms have existed around the world for many years but are a relatively new phenomenon in the UK. They are becoming more popular for the reasons given above as well as because they tend to make the role of the adviser easier when it comes down to servicing their client’s needs.
Watch out though, if there is one catch it is that it is sometimes costly to move your existing assets onto such platforms although as stated above in the long-run it can provide some important economies.
Some advisers have quite high initial charges so it is usually better to re-register existing holdings than to sell them all and repurchase.
There are plenty of platforms for you or your adviser to choose from so it is usually possible to find one that will suit your needs.
