IFA business insight

Here you can read the views of a couple of our participating IFAs.

  • Bradbury Hamilton
  • Fidelius

Sheriar Bradbury is managing director of Bradbury Hamilton

Only a few years ago, IFAs wanting to offer their clients a wrap proposition had just two choices - Transact or the pseudo-wraps of Skandia, Selestia and Cofunds.

As with all good ideas in financial services, the insurance companies cannot help but jump on the bandwagon and along came Abbey, American Express (remember them?), Lifetime, Standard Life and so on. Gaining true independence from the insurers continued to be a difficult thing to achieve. Then Nucleus was born.

Here at last was the opportunity to offer true investment advice across all tax wrappers where the main driver is not a purely transactional one.

Why do we like Nucleus? I can tell you in three words - independence, participation and simplicity.

Independence - To my mind, this is the most important issue, as I have already alluded to. Clients invested through Nucleus are not enticed to use the in-house funds. Instead, they have the choice of any investment they want. They are not mailed independently of the adviser with special offers. My client database is not at risk of being poached.

Participation - Nucleus is a young organisation and there will be ongoing development of the wrap for some time to come but at Bradbury Hamilton we see this as a good thing. As a participating IFA, we have the opportunity to influence the direction the wrap takes and what products are made available. We can suggest innovations and developments that we want to see and we can build a portfolio for a client that exactly matches their needs.

Simplicity - The Nucleus offering does not sing and dance, it does not have bells and whistles, the website does not dazzle and flash and, most important, the charges are straightforward and easy to understand.

At wrap level, there is no initial charge, no wrapper charges, no annual administration fees, no switch fees and no drawdown fees. Nucleus simply charges 0.35 per cent a year or 0.3 per cent over £1m. That's it, nothing else. Discounts have been arranged with the majority of fund management groups, with many funds accessible at creation or creation plus 25 basis points. Annual fund charges are also discounted, with rebates of around 50 per cent paid into the account. We can tailor remuneration structures to suit our clients' needs. Nucleus does not interfere with this.

The Nucleus platform, or offerings similar to this, has to be the way of the future. It allows us as professional advisers to offer our clients a lifetime of ongoing investment advice and not piecemeal transactional advice.

Alan Phillips is managing director of Fidelius

First and foremost, we are a firm of financial planners, not a manager of funds or experts in asset custody, investment dealing or investment administration.

From day one at Fidelius, we have been striving continually to improve the level of service our clients receive. An integral part of our service proposition is to deliver optimum investment performance. We have developed sophisticated systems and processes that combine asset and sector allocation techniques, based on our own in-house views on market sentiment.

Following extensive research into the products and services on offer from traditional providers, it became apparent to us that advisers have historically been dictated to by the big insurers in the way that we conduct our client relationships. They have controlled the product, the charges and managed the relationship with the fund manager.

We fully expect this process to continue further and that insurers will start focusing their attentions directly on the client, potentially encouraging the client to bypass the adviser in favour of direct or tied advice.

As an industry, we need to change from a transactional commission-based model to one driven by transparency and service. To deliver this, we need a sophisticated web-enabled management system.

The choice of Nucleus as our strategic partner was therefore an easy one to make. It is transparent, independent, innovative and IFA-focused. As a result of these features, the Nucleus wrap allows the adviser and client to have transparent, professional conversations over appropriate charges and service standards.

An extensive range of fund management groups is complemented by an appropriate range of tax wrappers, none of which are influenced by external masters. Nucleus chief executive David Ferguson is as fiercely independent as we are. The decision to allow participating IFAs to influence the development of the wrap can only mean that the solution will remain independent and competitive.

True bulk switching facilities and rebalancing will soon be available. These are essential services for portfolio management. Add these to a simple quotation system, excellent Fund managers and administration as well as low charges and you will be close to the complete wrap.

For those IFAs who are happy with the old transactional model, we look forward to speaking to your clients soon.