Q: How does the Abbey wrap platform work?A: We built the wrap platform because it shared similar characteristics with our self-invested personal pension platform, run by James Hay. Wrap, however, is more complex to administer than the Sipp, as it caters to more tax wrappers. Through our wrap platform, we currently manage Isas, Peps, Sipps, an offshore bond and an investment portfolio. The actual wrap platform is only one element of the wrap service we offer to advisers. When an adviser subscribes to a wrap, they are effectively outsourcing their back office to us. We offer a whole support service to advisers, as we are building a much deeper relationship with them than just selling a product. Given that we were the first large-brand wrap in the UK, we also undertook a big education programme to let advisers know how wrap can help their business model. Q: What made Abbey decide to launch this type of distribution model? A: Abbey had an advantage in that we have the Sipp business and a platform that could cater to open architecture. We recognised that with depolarisation, advisers needed support with fee-based advice. Wrap is a long-term strategic investment and for companies to make the decision to launch a wrap is a difficult one. Abbey had the existing technology and the market capability, which allowed us to make the wrap available to the market more quickly. Q: What advantages does a wrap platform have over a fund supermarket? A: The breadth of choice. We currently support Sipps and offshore bonds. Post A-day, the emergence of Sipp-type pensions will explode, moving into the domain of the mass affluent. Fund supermarkets that can cater only to Isas and investment products will struggle to compete. Most fund supermarkets provide access to modelling tools that look only at past performance. We are building a more sophisticated tool, which also looks at the probability of achieving client goals. Also, a fund supermarket pricing structure is typically opaque. It is not quite clear what deal fund supermarkets have struck with product providers, whereas wraps provide full transparency. I think fund supermarkets will have an important role for distribution, but, post-depolarisation, advisers will need to use a full wrap service. Q: How has your wrap service evolved since its launch in 2003? A: We have added new functions, including the offshore bond. We have built adviser modelling tools, and have rewritten application forms to simplify the process. We have also spent a lot of time with advisers in order to prepare for depolarisation. People are quite tired of hearing definitions of wrap, so we have launched an online demonstration where people can have a visual demonstration of what we offer. This is the best way of communicating the scale of wrap and what it supports. Q: As one of the first groups to launch a wrap, how do you feel about all the new wrap products joining the market? A: First, there have been a lot of promises and a lot of under-delivering because of complexity. I don’t think anyone in Britain has seen the level of uptake in wraps that was expected three years ago. I think we will see several big names join wrap and I welcome that as it will increase the understanding of wrap. I have been talking to several other providers in the UK to see what we can do as a group. I think when other providers come into the market, this will increase the appetite for wrap across the board. Q: How do you decide which funds will be offered through your platform? A: We have just introduced a new strategy, which is a prioritisation process. We currently select funds by sector and manager to ensure we have the broadest possible representation for our advisers. I have to question the ability of building a platform that caters to over 3,000 funds. Any platform that tries to offer whole-of-market will be inefficient and will have trouble delivering sophisticated portfolio modelling tools, defining Origo standards [a system for data exchange in financial services e-business] and providing fund factsheets. If you talk to wrap support elements, they are of the view that whole-of-market is not sustainable. This is a debate we need to have in light of depolarisation. Q: How does Abbey’s multi-manager fund range tie in with the platform? A: I keep them very separate, as they are entirely separate concepts. Abbey multi-manager is a product, while Abbey wrap is a service for advisers. Advisers can partner with Abbey wrap, but choose other product providers. Q: Will there be any changes to the Abbey wrap platform as we approach the depolarisation deadline? A: We are always making changes to the platform. We are currently reviewing our application process to make it simpler. We will also be examining our branding in conjunction with Banco Santander. I have a lot of enhancements to make, but I am also able to speak to people about what we are offering today, as I think it is the most complete wrap product on the market. Q: What advantages do intermediaries gain by using your wrap platform? A: They gain the ability to transact online from one place, outsourcing their back-office administration, accessing our negotiated rebates from fund managers, no establishment or transaction fees, no fees for switching and the ability to manage client accounts online. Essentially, this is a one-stop shop. Advisers can call us with all their queries across many product and asset types. Also, the wrap offers support services and a team of implementation consultants to assist transition. Q: Are there any disadvantages associated with using a wrap? A: The main issues in the UK are the inability to cater to legacy assets. Wrap is a very new business model for advisers and it is an investment of their time to transition their clients to wrap. We recommend that advisers manage the process in a phased approach. Q: Will the wrap distribution model see the most success this year? A: I have no doubt that over the next three years it will be the only way forward. In 2005, I think we will see steady growth, accelerated by more providers coming into the market. Q: What are your long-term plans for the wrap platform? A: We need to review how we support multi-tie providers. We will also be reviewing what we deliver through the branches. This will be a “baby wrap” solution, which will look very different from our solution for advisers. A major question for any wrap provider right now is technology delivery, which is key for us in delivering a low-cost service to advisers. As more wrap providers come into the market, I want to work with them and drive our common agenda as much as possible. Abbey is the sixth-largest bank by assets and the second-largest provider of mortgages and savings in Britain. It offers a range of personal financial services, both direct and through intermediaries, to 18 million UK customers and expatriates. Last year Abbey was acquired by Banco Santander, Spain’s largest financial group and the ninth-largest worldwide by market capitalisation.